Amazon stock drops 14% after disappointing quarterly report
Amazon stock suffered its worst day in 16 years Friday in the wake of a quarterly report, in which the company reported a net loss of almost $4 billion.
In a statement released Thursday, Amazon CEO Andy Jassy said the company has seen extraordinary growth in the past two years, but was now dealing with the challenges of inflation, supply chain issues, and global instability.
"The pandemic and subsequent war in Ukraine have brought unusual growth and challenges," Jassy said.
Shipping costs, fuel costs, and wage increases mean that, even though people are still buying stuff on Amazon, it's gotten more expensive to get the goods to them.
During an earnings call Thursday, Amazon CFO Brian Olsavsky pointed to the omicron variant in China, labor shortages, and the war in Ukraine as factors that have increased costs and cut into the company’s bottom line.
“These inflationary pressures have added approximately $2 billion of incremental costs when compared to last year,” Olsavsky said. “While we will continue to look for ways to mitigate these costs, we anticipate they will be around for some time.”
Another factor that dragged Amazon's profits down this spring was its involvement with an electric car company called Rivian Automotive.
Amazon owns 18% of Rivian.
Supply chain issues also had a big impact on the 13-year-old electric car company based in Irvine, California.
During the first quarter of 2022, a drop in Rivian's value caused Amazon to lose $7.6 billion.
Despite those challenges and losses, Amazon continues to grow. Olsavsky said the company has doubled its size of operations and doubled its workforce to 1.6 million employees in the past two years. Even though Amazon lost money in the first quarter of 2022, net sales increased by 7% to more than $116 billion.
Olsavsky also said Amazon has worked to keep the experience positive for customers despite increasing costs and global challenges.
"We have worked to protect and enhance the customer experience, despite a sharp increase in costs, particularly over the past three quarters," he said.