Amazon’s (NASDAQ:AMZN) third-quarter earnings beat Street estimates, but observers note its revenue and fourth-quarter outlook fell short of expectations, causing the stock to plunge in Friday trading.
Earnings per Share registered at $5.75 vs. $3.14 estimated, according to Refinitiv. Revenues, however, were $56.6 billion as opposed to $57.10 billion estimated.
The company gave fourth-quarter revenue guidance in the range of $66.5 billion and $72.5 billion, well-below consensus of $73.79 billion. The fourth quarter is the biggest and most important sales period for Amazon because of the holidays.
Shares in the tech giant sank $149.77, or 8.4%, in the first hour of trade Friday to $1,632.40. At this rate, it will be the stock's biggest decline since an 11% drop in January 2014.
Its fourth-quarter operating income guidance of $2.1 billion to $3.6 billion was also below Street expectations of $3.9 billion. Amazon said the wage increase announced earlier this month was incorporated into the guidance, but declined to comment beyond that.
Total revenue increased 29% from last year. North American sales were $34.3 billion, up 35% from last year, while international sales grew just 13% to $15.5 billion. Amazon's burgeoning advertising business, jumped 123% to $2.5 billion in revenue.
Net income, meanwhile, grew more than 10 times from the year-ago period, to a record-high $2.8 billion, marking the fourth straight quarter of topping $1 billion in profits. The $3.7 billion in operating income far-exceeded Street estimates of $2.1 billion
