Amazon stock dives as profit doubles but misses forecasts

Amazon Card

Amazon shares tumbled more than 12 per cent in after hours trading as the company missed profit expectations, despite reporting income had more than doubled year-on-year in the final quarter of 2015 to $482m (£336m) from $214m, or $1.00 per share from $0.45. However, this was significantly wide of analysts' expectations of $1.56 per share.

The firm also posted a 22 per cent increase in sales in the fourth quarter, up to $35.7bn from $29.3bn in the last period of 2014 - but missed expectations of $35.9bn in revenue.

Sales of Amazon Web Services, its cloud-hosting business, climbed again - continuing the trend from the last quarter - from $1.42bn to $2.41bn. Spending in this division was up to $1.7bn from $1.2bn in the third quarter of 2015.

The firm expects net sales to be between $26.5bn and $29bn this quarter, representing growth of between 17 per cent and 28 per cent compared with the first quarter of 2015.

“Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100bn in annual sales and serve 300mn customers,” said Jeff Bezos, Amazon's founder and chief exec.

“And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like day one."

The online retail giant’s stock had a successful day of trading before the bell, closing up 8.91 per cent per cent at $635.50.

Amazon has been ramping up its presence in the UK over the last six months. In November 2015, the company launched its Pantry service, offering Amazon Prime customers next-day delivery on over 4,000 "everyday essentials", including major food and drink brands, household supplies, and health and beauty.

The group has also put more traditional grocery brands on edge with the rollout of Amazon Fresh, which launched in London and Birmingham last October under the Amazon Prime Now banner. The Fresh service offers delivery of kitchen essentials within an hour of ordering.

Amazon recently revealed that it is to create 2,500 new jobs in the UK.

Full story: Amazon stock dives as profit doubles but misses forecasts: City A.M.