E-commerce giant Amazon (NASDAQ:AMZN) Inc. reported a much lower earnings on Thursday. The disappointing results triggered a sell off during opening trading hours and the stock closed at 815.85 down 0.4%. Amazon has been consistently delivering strong profits in recent years but this time it surprised many investors. Analysts was expecting around 79 cent per share in earnings but instead the figure fell short at 52 cent per share.
Amazon’s main profits come from cloud services and selling computer storage. Despite profitable news from their Amazon web services, the company’s overall expenses surged to around $11 billion. CEO Jeff Bezos said the reason of the increased costs was due to high warehouse and logistics expenses which are “a big undertaking”. The web giant has launched several new projects to try shorten delivery time to clients, by building its own delivery shipping business and accelerating its own transportation capabilities around the world.
Earlier this week economists’ forecasts that Amazon will eventually break the $1,000 share mark, after Thursday’s report it is highly unlikely for now. Markets were over anticipating the company’s profits this week, which has received several price hikes before the announcement on Thursday. The company is expected to continue to invest in its cloud computing division.
Questions have been raised as to whether Amazon can redeem itself in the last quarter of 2016? As businesses are entering the important holiday season it’s time for Amazon to start delivering the goods.