Amazon Shares Drop As Third-Quarter Results Disappoint Investors
Amazon disappointed investors Thursday by posting a bigger loss than expected, sending its shares down 11 percent in after-hours trading.
Analysts and investors are concerned about the company's spending on everything from drones for delivery to producing TV shows. They're also concerned about increasingly fierce competition from the likes of Google.
Amazon's third-quarter loss widened to $437 million, or 95 cents a share, from $41 million, or 9 cents, a year ago. Analysts had expected a loss of 76 cents a share, according to the research firm Factset.
Neil Doshi, an analyst with the investment bank CRT Capital, says Google is starting to go head-to-head with Amazon by teaming up with retailers to deliver goods quickly, and has even introduced a membership service similar to Amazon Prime called Google Express.
"You can order stuff from Costco or from Target, and Google Express will go pick those items up and deliver those items to you same day or next day," Doshi said.
That service is only available in a few cities such as Boston, Chicago and San Francisco, and is not yet offered here in Seattle. But that puts pressure on Amazon to spend heavily on expanding its same-day delivery service.
Investors were also disappointed that the company is predicting slower holiday sales growth this year. Amazon says it expects sales in the fourth quarter to rise 7 percent to 18 percent from the same period last year. Sales in the third quarter rose 20 percent.