Amazon.com, Inc. Shares Fall After Weak Guidance

Amazon released its latest earnings report after closing bell tonight, posting $1.54 per share in earnings on $43.7 billion in sales. Analysts had been expecting GAAP earnings of $1.37 per share on $44.7 billion in sales, compared to $1 per share in GAAP earnings and $35.7 billion in revenue in the year-ago quarter.

Amazon Web Services continues to grow

North America sales rose to $26.2 billion, while International sales improved to $14 billion. Analysts had been expecting the segment to pose $32.8 billion in online sales revenue. Amazon Web Services revenue grew to $3.5 billion from $2.4 billion in the year-ago quarter. Wall Street’s average estimate stood at $3.6 billion before tonight’s report.

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Management continued to talk up their Prime service.

“Our Prime team’s customer obsession kept them busy in 2016,” said Amazon founder and Chief Executive Jeff Bezos said in a statement. “Prime members can now choose from over 50 million items with free two-day shipping — up 73% since 2015. Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery.”

Amazon issues weak guidance

Amazon said toward the end of December that the holiday shopping season was its best ever, as it shipped more than 1 billion items around the globe. The online retailer’s own consumer electronics devices were among the best-selling items, it said, as the Echo Dot and Amazon Echo both performed well during the holiday shopping period.

The company has been taking a bite out of brick-and-mortar retailers, as Macy’s, Target and others issued warnings about profits due to weak sales during the holidays. Amazon took one-third of e-commerce sales between the beginning of November and Cyber Monday, said Slice Intelligence, and then 44% of online sales in the two weeks right before Christmas.

It seems that the online retailer doesn’t expect the holiday season strength to continue into the early part of this year, however. For the first quarter, Amazon expects revenue to be between $33.25 billion and $33.75 billion, which is significantly weaker than the consensus estimate of $36 billion.

Shares of Amazon tumbled by as much as 4.05% to $806.83 in after-hours trading tonight.