Amazon Posts Biggest Annual Loss on Record, Poor Fourth-Quarter Sales

An Amazon logo on a delivery van in Boston, Mass., on Oct. 1, 2020. Steven Senne/AP Photo

The stock price of retail and tech giant Amazon dropped in late trading on Feb. 2 after the company posted a mixed bag of results for the fourth quarter, reporting its first unprofitable holiday period since 2014.

The Jeff Bezos-headed company on Thursday reported a net income of $278 million for the quarter, or $0.03 per diluted share, compared with $14.3 billion, or $1.39 per diluted share, in the fourth quarter of 2021.

Net sales increased to $149.2 billion from $137.41 billion in the year-ago quarter. Analysts on average were expecting earnings of $0.17 a share on sales of $145.71 billion, according to FactSet.

For the full year, Amazon posted a net loss of $2.7 billion, or $0.27 per diluted share, compared with a net income of $33.4 billion, or $3.24 per diluted share in 2021.

The last time Amazon failed to make a profit was again in 2014.

However, revenue for the full year was $513.98 billion, up 9 percent year over year, from $469.82 billion a year ago, and far surpassing the company’s guidance issued in its third-quarter results, which said it expected net sales to be between $140.0–148.0 billion, or to grow between 2–8 percent compared with fourth quarter 2021.

Amazon Hit by Rivian Woes

The losses appeared to be driven largely by Amazon’s huge investment in the electric automaker Rivian, which cost the company $2.3 billion in net income in the quarter.

Rivian’s value has dropped more than 80 percent in the past year amid supply-chain issues and production problems. Amazon has a 20 percent stake in the automaker, according to a filing (pdf) with the U.S. Securities and Exchange Commission (SEC).

Another area that appeared to perform less than spectacularly last year was Amazon’s international segment, which saw sales decreased 8 percent year over year, to $34.5 billion.

Meanwhile, AWS, Amazon’s cloud computing platform, saw an operating income of $5.2 billion in the fourth quarter, compared with an operating income of $5.3 billion in the fourth quarter of 2021.

The latest results come after Amazon in November announced it was initiating layoffs, citing the “current macroeconomic environment” which has impacted a string of tech giants, with Amazon CEO Andy Jassy planning to reduce the company’s headcount by 18,000 in 2023, according to a statement on its website.

The online retailer has also shuttered a string of physical stores over the past 12 months, including its bookstores and pop-up shops.

On Jan. 19, the company announced it will be discontinuing its charity program called AmazonSmiles in further efforts to cut costs.

Amazon Cites Macroeconomic Environment

Amid the volatile “macroeconomic environment” and fears of an impending recession on the horizon, Amazon forecasts operating income of between $0 and $4.0 billion this quarter, compared with $3.7 billion in the first quarter of 2022.

Net sales, meanwhile, are expected to be between $121.0 billion and $126.0 billion, or to grow between 4 percent and 8 percent in the first quarter compared with the first quarter of 2022.

Analysts were expecting an operating income of $4.04 billion on sales of $125.09 billion, according to research firm FactSet.

Despite the mixed results, Jassy said in a statement that the company is “encouraged” by the continued progress it’s making with its cost-reducing efforts.

“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Jassy said. “The vast majority of total market segment share in both global retail and IT still reside in physical stores and on-premises data centers; and as this equation steadily flips, we believe our leading customer experiences in these areas along with the results of our continued hard work and invention to improve every day, will lead to significant growth in the coming years.”

“When you also factor in our investments and innovation in several other broad customer experiences (e.g., streaming entertainment, customer-first health care, broadband satellite connectivity for more communities globally), there’s additional reason to feel optimistic about what the future holds,” Jassy added.