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How Amazon lost 30bn dollars off its market value

By Don-Alvin Adegeest

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Amazon delivered its largest quarterly profit in the company's entire 20-year history, however despite record sales of over 100 billions dollars this year, the company saw more than 30 billion wiped from its market value. How did this happen?

Amazon posted a profit of 482 million dollars in the Holiday period, however its 22 percent revenue jump in the final quarter to 35.7 billion also missed its analysts’ lofty expectations.

Amazon's online retail operation has grown strongly in the past year, with the company capturing yet more customers by aggressively building new warehouses near city centres to speed deliveries, however its Amazon Web Services saw sales increase 69 percent to 2.4 billion dollars.

As a result of investing in its Web Services, Amazon has seen its expenses steeply rise. The company's operating costs climbed 20.5 percent to 34.6 billion dollars while shipping costs also jumped 37 percent to 4.17 billion dollars.

As a percentage of sales, shipping costs rose to 12.5 percent from 10.9 percent in the year-earlier period, suggesting the company relied more on expensive third-party couriers to delivery goods on time during the Holidays.

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