Amazon sees a billion-dollar miss on Q4 revenues
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Michelle Clancy
| 03 February 2017

E-commerce giant Amazon missed on revenues for the fourth quarter of 2016 by almost a full billion dollars, leading to its shares falling about 5% after the bell yesterday on the news.

The company reported $43.7 billion, with its cloud business Amazon Web Services tumbling to 47% year-over-year growth from 69% in the year-ago period. Wall Street was expecting just under $36 billion in revenues, or a 23.4% growth. The company also saw more than a 43% increase in marketing expenses and nearly 84% increase in general and administrative expenses.

Amazon boss Jeff Bezos touted Prime Video’s success, however, saying that “tens of millions of new paid members joined the programme in just this past year.” He added: “Prime Video is now available in more than 200 countries and territories.”

Amazon’s guidance rocked investors as well: for the first quarter, net sales are expected to be between $33.25 billion and $35.75 billion, or to grow between 14% and 23% - down significantly from Q1 2016. Amazon also anticipates an unfavourable impact of approximately $730 million or 250 basis points from foreign exchange rates. Operating income is expected to be between $250 million and $900 million compared with $1.1 billion in the first quarter of 2016.

“Investors may need to rethink their positions,” said Seeking Alpha analyst Bill Maurer. “While the company is still growing its top line at a nice clip, it's not growing as fast as thought, and that looks to be pressuring the bottom line moving forward. For a company with razor-thin margins, investors were expecting a lot more, so Amazon definitely disappointed.”