Amazon’s Market Value Evaporates 80 Billion, Bezos: Continue to Burn Money

Amazon announces its third quarter earnings report as of September 30, 2019. The financial report shows that Amazon’s third-quarter revenue was $70 billion. A 24% increase from the $56.6 billion in the third quarter of 2018. Net profit was $2.1 billion, down 26% from $2.9 billion in the same period last year. After earnings per share was $4.23, compared to $5.75 in the same period last year.

This is the first year of Amazon’s decline in profit for the first time in more than two years. Causing its share price to plummet 9% and the market value to evaporate $80 billion.

The decline in Amazon’s performance is on the one hand. The growth of cloud service revenue is slowing down. On the other hand, it is launching the “Amazon One Day” service of burning money machines, and investing huge sums to speed up logistics. The financial report shows that Amazon’s total freight revenue surged 46% year-on-year to US$9.608 billion.

Bezos insisted on this huge “one-day” service. He said: “Customers like to change the delivery speed of Prime members from two days to one day. This year, they have purchased billions of goods and enjoyed one. Free shipping service to Japan”.

“This is a huge investment and a correct long-term decision for the customer. And, despite this counterintuitive, the fastest delivery speed produces the least carbon emissions because these products are shipped from a distribution center very close to the customer. of”.

From the financial report, Amazon’s core revenue source is still cloud business, contributing about 70% of the profits, but its growth rate has declined, from 29% a year ago to 24%. Amazon responded in a conference call and is still investing heavily in cloud business, which should drive growth by introducing new cloud service offerings at lower prices.

The return of a huge investment cycle is weakening Amazon’s profitability. Its operating income fell to $3.2 billion, down 14% from $3.7 billion in the same period last year. For the fourth quarter, Amazon expects operating income to be between $1.2 billion and $2.9 billion, and is below the market estimate of $4.2 billion.

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