Amazon suffers steep loss in Q3 2022 due to high inflation post-covid

Amazon, the renowned American e-commerce giant, has reportedly experienced significant year-over-year revenue declines as post-pandemic shopping patterns and inflation caught the firm off guard.

As per Amazon's Q3 2022 financial report released today, operational income dropped to $2.5 billion from $4.9 billion during the same period in 2021, whereas net income fell to $2.9 billion from $3.2 billion.

Amazon reported an operating loss of $0.4 billion in the North American market for the third quarter of 2022, a disappointing result compared to the over $1 billion in operating profit the firm generated in the same quarter the previous year. The IT giant performed poorly internationally, recording a $2.5 billion operating loss as opposed to a $900 million shortfall in Q3 2021.

The cloud services arm of Amazon, known as Amazon Web Services (AWS), was a bright light in what was otherwise a bleak quarter. In Q3 2022, AWS' operating income increased to $5.4 billion from Q3 2021's operating income of $4.9 billion. However, that is still less than the $5.72 billion in operating profit that AWS generated in Q2 2022.

After-hours trading for Amazon saw a 20% decline in its stock following the announcement of its Q3 losses. Additionally, Amazon's surprisingly unclear Q4 forecast, which projects an operating income of between $0 and $4 billion as opposed to $3.5 billion in Q4 2021, is probably to be blamed for this outcome as well.

During the pandemic, Amazon invested billions to expand its fulfillment network by two times, a decision that first paid off but ultimately backfired. As e-commerce sales in 2022 increased less slowly than anticipated, the company was compelled to cancel or postpone plans for more than a dozen facilities.

The firm's spending on shipping increased 10% to $19.9 billion in the third quarter of 2022, indicating that rising energy prices are another headwind that is starting to have a significant impact on Amazon's operations.

Source credit: https://techcrunch.com/2022/10/27/amazons-income-dipped-in-q3-2022-as-the-economy-took-its-toll/