Amazon Reports Rare Quarterly Loss as Online Shopping Slows
The ocean of red ink in Amazon's report came mostly from the company's accounting for a $7.6 billion loss in value of its stock investment in Rivian Automotive, an electric-vehicle startup.
April 29, 2022 at 01:25 PM
5 minute read
Amazon reported its first quarterly loss since 2015, its money-making juggernaut stalled by a slowdown in pandemic-induced online shopping and a huge write-down of its investment in an electric-vehicle startup.
Amazon reported a loss of $3.84 billion, or $7.56 a share, for the first three months of the year. A year ago, it reported a profit of $8.1 billion, or $15.79 a share, for the first quarter. Wall Street analysts expected a profit of $8.35 a share in the latest quarter, according to FactSet.
The ocean of red ink in Amazon's report came mostly from the company's accounting for a $7.6 billion loss in value of its stock investment in Rivian Automotive. Rivian went public in late 2021 and its stock traded at close $180 at one point. It closed Thursday at $32.18. Ford Motor Co. reported a similar write-down of the value of its Rivian investment Wednesday.
Amazon's e-commerce business also reported an operating loss of $1.57 billion in North America and $1.28 billion internationally.
Meanwhile, sales at Amazon's cloud-computing business, which helps power the online operations of Netflix, McDonald's and other companies, grew 37% in the quarter. And sales in its advertising business, where brands pay to get their products to show up first when shoppers search on Amazon's site, rose 25%.
Still, the slowdown in online spending is real and broad-based. While in-store sales rose, March is the first month to show decline in online sales since the pandemic began, according to Mastercard SpendingPulse, which tracks spending made over the Mastercard payments network and survey estimates for other payments made with cash and checks.
Amazon prospered during the COVID-19 pandemic as homebound people eager to limit human contact turned online to purchase what they need. But growth has slowed as vaccinated Americans feel more comfortable going out. According to the e-commerce research firm MarketPlace Pulse, the value of goods sold on Amazon last year grew by half the rate compared to 2020.
Like many others, Amazon is dealing with pressure from inflation and supply-chain issues. In the past two years, Amazon's Chief Financial Officer Brian Olsavsky said the company has doubled the size of its operations and nearly doubled its workforce. He said labor shortages and a lack of physical space are no longer major issues, but the company continues to face a variety of pressures such as increased shipping costs.
Inflation-related expenses added roughly $2 billion of incremental costs when compared to last year, Olsavsky said, adding that the company also incurred another $4 billion in costs related to productivity loss and other inefficiencies.
"The pandemic and subsequent war in Ukraine have brought unusual growth and challenges," said Amazon CEO Andy Jassy in a statement. "Our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network. We know how to do this and have done it before."
To offset rising fuel costs and inflation, the retail giant has added a 5% surcharge to fees it charges third-party sellers who use its fulfillment services. Last quarter, Amazon also hiked its annual Prime membership fee by $20, a first since 2018. Despite the fee hike, Olsavsky said millions of new Prime members have enrolled during the quarter.
Revenue rose 7% to $116.44 billion, compared with $108.52 billion in first quarter 2021, representing the company's sixth consecutive quarter of revenue topping $100 billion. Amazon had projected sales between $112 billion and $117 billion. Analysts surveyed by FactSet were expecting $116.5 billion.
"Given the pace at which the business grew over the past few years this shift is hardly surprising," said Neil Saunders, managing director of GlobalData Retail. "It represents more of a post pandemic reset than catastrophic failure. Nevertheless, the slowdown raises important questions over how Amazon can restore momentum and regain its leadership position as one of the primary drivers of online growth."
Amazon said it forecasts sales for the current quarter to range between $116 billion and $121 billion, below the $125.33 billion that analysts are forecasting.
The results come as Amazon is closing all of its brick-and-mortar bookstores, as well as its 4-star shops and pop up locations, as the online retail behemoth reworks its physical footprint. The company also faces a growing unionization push from inside its workforce.
A second union election is currently underway at a company warehouse on Staten Island, New York, the same borough where workers at a nearby facility voted to unionize earlier this month. Amazon has filed objections over the election with the National Labor Relations Board and is seeking to re-do the vote.
The final outcome of a separate union election in Bessemer, Alabama, is still up in the air with 416 outstanding challenged ballots hanging in the balance. Hearings to review the ballots are expected to begin in the coming weeks.
Haleluya Hadero reports for the Associated Press. AP writer Anne D'Innocenzio contributed to this report.
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllFTC Receiver Eyes Fraudulent Messages Ecommerce Company's Clients
Attorney Who Got 2,200 Spam Messages Helps With FTC Freeze
Federal Judge Sides With FedEx in Arbitration Dispute Over 'Transportation Worker' Definition
5 minute readLaw Firms Mentioned
Trending Stories
- 1Haynes and Boone Expands in New York With 7-Lawyer Seward & Kissel Fund Finance, Securitization Team
- 2Upstart Insurer That's Wowing Industry Hires AIG Legal Exec to Help Guide Global Expansion
- 3Connecticut Lawyers in Spotlight for Repping FBI Agents
- 4SEC Sued for Failing to Reveal Records Involving Simpson Thacher Attorney
- 5Lawsuit Accuses University of California of Racial Discrimination in Admissions
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250