Shares in Amazon down 5% after Q3 profits fall short

Shares in Amazon down 5% after Q3 profits fall short

Shares in Amazon fell 5% yesterday (27th October) after the company’s third quarter net income was lower than expected, although net sales increased 29% to $32.7bn (£26.9bn).

For the third quarter, ending 30th September, net income totalled $252m (£207m) in the third quarter, or 52 cents (43 pence) a share. That figure was below the 78 cents (64 pence) a share, according to a Thomson Reuters consensus estimate.

Amazon's shares fell more than 5% in after-hours trading.

Brian Olsavsky, c.f.o. at Amazon, told the New York Times the gap between Amazon’s third quarter results and expectations was due to the company making significant investments in its business. It opened warehouses during the quarter and will double its spend on video content production and marketing during the second half of the year, he said.

During the third quarter net sales increased 29% to $32.7bn (£26.9bn), whilst operating income was up 41% to $575m (£472.4m).

Fourth quarter operating income is expected to be between $0 and $1.25bn (£0 and £1.03bn).

Sales during that period are estimated to grow between 17-27%, although part of that increase will be because of the favourable impact from foreign exchange rates.