Amazon Seen Falling 29% Off High Into Deep Bear Market

Amazon’s Jeff BezosMore

Analysts had expected third-quarter revenues of $57.1 billion in revenue, but Amazon reported $56.6 billion-which is still up 29% from a year ago.

But the company's revenue for the period was lower than expected, and it offered a disappointing revenue forecast for the fourth quarter.

Analysts have been watching the company's AWS cloud services business, and Amazon met, but did not beat Wall Street estimates, reporting revenues of $6.7 billion.

Net income increased to $2.9 billion in the third quarter, or $5.75 per diluted share, compared with net income of $256 million, or $0.52 per diluted share, in the third quarter of 2017. After blazing a path beyond $2,000 earlier this year, imputing a valuation of the company of $1 trillion, the stock price has fallen back a bit as tech stocks overall continue to get pummeled this fall. For years, the company posted razor-thin quarterly profits, spending most of what it earned on building warehouses and making other investments.

Shares in Alphabet fell about 6 per cent, knocking about $45 billion off its market value after it fell short on sales after beating estimates for the past eight quarters.

The 9-percent fall in shares knocked more than $80 billion off Amazon's market value and relegated it behind Microsoft Corp.

"We're very happy not only in the strong membership numbers", Olsavsky said Thursday, "but also in the continued strength of engagement" of Prime's shipping benefits and Prime Video. Since the end of September, analysts have cut their 2019 revenue estimates by 1%.

Sales from Amazon's main online stores rose 11 percent from a year earlier, while the Amazon Web Services cloud-computing unit reported a 46 percent increase in sales. It purchased online pharmacy PillPack in June, which followed its US$13.7 billion acquisition of Whole Foods previous year to jump start its grocery business.

Operating Profit upside was AMZN's biggest ever.

Despite the lower-than-expected revenue Amazon's finance chief Brian Olsavsky said on a call with reporters Thursday: "We feel it's a really strong quarter". It was the second consecutive quarter that sales fell short of estimates and the first time for the back-to-back revenue miss in nearly four years.

The company now groups its advertising group under "other" on its balance sheet. North American retail operations are doing much better than the years of yore that saw the company lucky to count two percent margin. In its "other" category, which is mostly made up of its growing advertising business, revenue more than doubled to $2.5 billion.

Amazon's stock closed regular trading up $117.97 a share, or 7.1%, to $1,782.17.

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