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Amazon shares plunge as pandemic sales boom wanes

The company reported its first-quarter earnings Thursday.

Amazon CEO Andy Jassy announced the company's quarterly earnings Thursday. (David Ryder/Bloomberg)
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Amazon posted its first quarterly loss in seven years Thursday, sending its stock tumbling more than 10 percent in after-hours trading.

The Seattle e-commerce giant’s earnings also posted a 7 percent revenue increase, slower than normal for the huge company. People flocked to Amazon to buy home goods, entertainment items and pretty much everything else during the early months of the coronavirus pandemic, causing the company’s sales to boom.

But now that many businesses have opened back up and people are venturing outside their homes more and more, that boom is starting to wane. (Amazon founder Jeff Bezos owns The Washington Post.)

The company lost $3.8 billion during the quarter, which includes a $7.6 billion loss from Amazon’s investment in electric carmaker Rivian. Amazon said last year that it owned a 20 percent stake in the smaller company. Rivian’s shares have plunged this year.

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Amazon said it expects lower sales than analysts were hoping for in its current second quarter, pointing again to the post-pandemic effect.

Amazon executives said the company expanded its warehouses and workers there so much that they now have too much space and are overstaffed, something the company will work to straighten out. CFO Brian Olsavsky said on a call with media that the company had to make decisions about warehouse space more than a year in advance and wouldn’t necessarily change what it did.

Still, as online pandemic shopping growth is waning, the company has ended up with too much. OIsavsky insisted demand “remains strong” and customer numbers look good.

Amazon, like many large companies, has been dealing with business challenges caused by supply chain crunches, higher fuel and labor costs and the impact of the war in Ukraine.

CEO Andy Jassy referred to the war and the pandemic as bringing “unusual growth and challenges” in a statement. He also said the company, which has been expanding its warehouses significantly in the past two years, will now focus on boosting productivity and “cost efficiencies.”

“This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020,” he said.

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Amazon is facing another challenge on the labor front — its warehouse workers in Staten Island voted this month to form the first Amazon union in the United States. A second warehouse nearby is voting this week on whether to join them. Amazon has strongly opposed the unions.