Business

Amazon stock falls after company reports $126M net loss in the second quarter

Image Credit: zinger/Flickr

Amazon’s stock has had a rough day.

The e-commerce and cloud giant’s stock is down by almost 11 percent in after-hours trading after it reported that it lost $126 million in the second quarter of 2014, or 27 cents per diluted share. Compare that to net loss of $7 million in the same quarter last year, or 2 cents per diluted share. Analysts expected losses of 15 cents per share.

Amazon reported strong sales growth in the quarter, up 23 percent to $19.34 billion, compared with $15.70 billion in second quarter 2013. But the sales didn’t translate into strong bottom-line earnings. Not by a long shot.

The company reports swinging down to an operating loss of $15 million in the second quarter of this year, compared with operating income of $79 million in second quarter 2013. But this shouldn’t come as a huge surprise, as throughout its history Amazon has always focused on accelerating products and traffic, not necessarily earnings.

Amazon’s cost of sales was 69 percent of revenue for the quarter, down slightly from 71 percent in the year ago quarter.

Amazon spent $911 million during the quarter on marketing, or 4.7 percent of revenues, compared to 4.1 percent a year ago.

The company isn’t feeling very bullish where next-quarter guidance is concerned. Amazon expects net sales of between $19.7 billion and $21.5 billion, or to grow between 15 percent and 26 percent compared with third quarter 2013.

It expects losses to widen even further, with operating losses of between $810 million and $410 million in losses, compared to $25 million in third quarter 2013. This guidance includes approximately $410 million for stock-based compensation and amortization of intangible assets, Amazon said.

More information:

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com, Inc. seeks to be Earth's most customer-centric company, where cu... read more »

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17 comments
Krisha Patel
Krisha Patel

Amazon's razor-thin margins, buying into CEO Jeff Bezos assurance that Amazon is investing in the longterm. However, shares have been down 10% this year, showing that they might be ready to put pressure on the company to start showing a profit.

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Sharjeel Durrani
Sharjeel Durrani

Inni Siddika prolly bc of all that free stuff they send me :D

Elaine Yee
Elaine Yee

Still buy from them all the time. Love them!

Shilpa Hirani
Shilpa Hirani

Typical behavior of a company that is trying to gain monopolistic dominance.  Once they eliminate most of their competitors and gain customer loyalty they can slowly increase prices to gain profits.  By that time the consumer will look around and wonder where all the other stores went while Amazon keeps raising prices.   Just be patient shareholders, you'll get your return in due time. 

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David Geertz
David Geertz

they've been taking losses since 1998. #houseofcards

Eric Gonzalez
Eric Gonzalez

Probably because of r&d. They'll be up soon but the phone hasn't gotten great consumer reception.

Joshua Darlington
Joshua Darlington

When they battle for market share, they are not afraid to take losses. They will crank up the profits once they thin out some of competitors

Patrick Quinn
Patrick Quinn

That and the Amazon phone is currently being widely panned.

Jimmy N Nguyen
Jimmy N Nguyen

Amazon runs their own payment processing system. You're welcome.

Alan A Armstrong
Alan A Armstrong

They should start accepting BitCoin and cut out a bunch of those credit card fees. Geez, I gotta start charging for this stuff. ;)