Amazon reported disappointing earnings yesterday, missing both revenue and profit estimates. The company’s revenue growth dropped slightly to 20% as the e-commerce giant posted net sales of $20.58 billion. What’s more worrying though is the fact that Amazon’s net loss widened to $437 million as investments, stock-based compensation and lackluster sales of the Fire Phone weighed on the bottom line.
After a radical price cut on the Fire Phone in September had fuelled rumours about slow sales of Amazon’s first smartphone, the company all but admitted defeat yesterday. Not only did Amazon take a $170 million write-off related to the phone’s weak performance, CFO Tom Szkutak also admitted that his company ended the quarter sitting on $83 million worth of unsold Fire Phones.
Amazon’s stock price dropped 10% in after hours trading, indicating that some of the company’s shareholders are starting to lose their patience. Thus far shareholders had been remarkably trustful of Jeff Bezos’ long-term growth strategy, helping Amazon’s stock price to triple over the past 5 years despite the absence of any substantial profits.
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