Amazon.com stock slides amid soaring profit
Despite posting stronger than expected third-quarter earnings – with profits climbing 48% - Amazon.com’s shares slid nearly 13% in after-hours trading Wednesday, indicating that the online retailer cannot escape the weak economy.
Tom Szkutak, Chief Financial Officer, said on a conference call with analysts that the company experienced slower growth rates near the end of the third quarter, coinciding with the onset of recent turmoil in global financial markets.
Amazon has issued a glum forecast for the holiday season, and fears of an economic slowdown have already sent Amazon shares down more than 40% this year – from $92.64 to $52.97.
Though the real question is how Amazon will fare as the downturn deepens in the coming months, Amazon saying it is expecting fourth-quarter sales between $6 billion and $7 billion.
The Seattle-based company reported net income of $118 million, or 27 cents per share, on sales of $4.3 billion, which last year during the same quarter was - earnings of $80 million, or 19 cents per share, on sales of $3.3 billion.
The company’s net shipping cost also rose, however, to $132 million from $89 million in the year-ago quarter.
Amazon did not say what the increase could be attributed to. It did say that during the quarter it cut the minimum order price for free shipping at its UK site to 5 pounds from 15 pounds.
Lazard Capital Markets analyst, Colin Sebastian, said Amazon is clearly “feeling the impact of the weaker economy,” but added that “at the same time, they continue to grow much faster than overall e-commerce, so the platform does remain strong from that point of view.”