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Amazon’s Third Quarter Results Miss the Mark
There’s lots of scrutiny around publicly held retail companies.

The acceleration of all things eCommerce has led to record earnings and lofty expectations. That’s why it’s not shocking that Amazon saw shares drop after the company reported lighter-than-expected third-quarter results and poor guidance for the upcoming holiday period.

Their third quarter looking sluggish is simply a result of the retail giant being unable to keep up with pandemic-driven sales levels. Revenue rose in the third quarter for Amazon–up 15 percent. The problem though, is it was down from 37 percent growth compared to the same period a year ago, yet another unavoidable casualty of COVID-influenced sales numbers.

These numbers are reflective of the slowing sales growth Amazon is experiencing, mainly due to a couple factors:

  1. Consumers heading back into physical retail locations
  2. The ever-present, highly chaotic nature of the current supply chain predicament

These two factors will continue to weigh on sales, which segues nicely into the next big miss: their guidance.

For the fourth quarter, Amazon forecast sales between $130 billion and $140 billion. These numbers represent a modest 4-12 percent growth. Analysts, on the other hand, were expecting revenue projected closer to $142 billion, which represents a 13 percent YoY increase. Also, for the first time in its history, revenue from Amazon services surpassed revenue derived from its retail sales. Net product sales represented $54.9 billion while revenue from Amazon Web Services (AWS), Amazon Advertising (sponsored search and DSP), third-party seller services and their Amazon Prime subscriptions added up to $55.9 billion.

Amazon Web Services had a particularly strong quarter. Revenue via AWS jumped 39 percent to $16.1 billion while analysts anticipated closer to $15.5 billion. Without the profit derived from AWS, Amazon would have recorded a loss for the quarter.