Amazon (NASDAQ: AMZN) took a pounding on Friday markets, after reporting its third-quarter earnings fell short of street expectations on Thursday.
The company also gave dismal revenue guidance for the holiday shopping season, spooking investors who were expecting a huge pay off from Amazon’s growing investments across the company.
Earnings per Share came in at $4.23, as opposed to the $4.62 reading expected by analysts.
Its Amazon Web Services arm took in $9 billion vs. $9.1 billion.
Revenue grew 24% to $70 billion for the quarter, showing the heavy investment in free one-day shipping is leading to more purchases.
Amazon spent over $800 million in each of the last two quarters to expand its free one-day delivery program to more products and regions, and said it is expecting to spend another $1.5 billion in the initiative during the fourth quarter to expand its warehouse footprint and product selection.
AMZN also pointed to increased spending on the growing cloud business and bolstering its advertising sales force.
However, Amazon’s fourth-quarter revenue guidance came in between $80.0 billion to $86.5 billion, far below the street’s average estimate of $87.4 billion, indicating the all-important holiday shopping season may be not all it’s cracked up to be.
Amazon’s net income dropped to $2.1 billion, down 26% from the year-ago period’s $2.9 billion. For the fourth quarter, Amazon is forecasting operating income to fall between $1.2 billion and $2.9 billion, also below the $4.2 billion street estimate.
Shares faltered $52.59, or 3%, to $1,728.20
