SEATTLE – Amazon’s profit and revenue both grew in the latest quarter but its results fell below what Wall Street was expecting and shares of the world’s biggest online retailer declined after-hours.
Amazon has long focused on spending the money it makes to grow its business and expand into new areas, from movie streaming to e-readers and even grocery delivery.
Investors have largely forgiven thin profit margins and zeroed in on the company’s solid revenue growth and long-term prospects. It’s posted losses in two previous quarters due to rising operating costs but the stock hit an all-time high of $408.06 last week.
However, Thursday’s disappointing results and modest revenue forecast for the current quarter sent shares tumbling up to 10 per cent after the closing bell. In recent aftermarket trading, shares of the Seattle-based company were down $20.91, or 5.2 per cent, to $382.10.
Amazon.com Inc. also said it is considering a $20 to $40 price hike on its popular Prime service, which currently costs $79 a year in the U.S. and offers free two-day shipping on most items. The company said it has not raised the price on Prime in the 9 years since its launch, even though shipping costs have increased and it has added new services, such as video streaming.
Amazon earned $239 million, or 51 cents per share, in the October-December period, which included the key holiday shopping period. That’s up from $97 million, or 21 cents per share, in the same period a year earlier.
Revenue grew 20 per cent in the fourth quarter, to $25.59 billion from $21.27 billion.
Analysts were expecting earnings of 74 cents per share on revenue of $26.05 billion, according to FactSet.
For the current quarter, Amazon is forecasting revenue of $18.2 billion and $19.9 billion. The midpoint of that range is below analysts’ $19.67 billion estimate.