Bezos wants to use “short-term investment” in exchange for “long-term returns.”
Editor’s note: This article is from WeChat public account “Geek Park” (ID: Geekpark), author Shen Zhihan.
As the investment in the logistics foundation will help Amazon out of the “retailer’s unlimited profit reduction” game, more and more consumers are shopping on Amazon for “convenience” and “choice”. Not “low price.”
On October 24th, US Eastern Time, Amazon released its third quarter earnings report for 2019. The financial report shows that Amazon’s third quarter revenue was 69.98 billion, an increase of 24% year-on-year, higher than market expectations. Net profit was US$2.134 billion, down 26% from US$2.883 billion, which did not meet market expectations. This is the first year-on-year growth in profit since the third quarter of 2017.
Affected by this, the stock price fell by 8.1%. Bezos’ personal equity net worth fell to $102.8 billion, nearly $5 billion less than Bill Gates.
Overall, Amazon’s sales in the first three quarters of this year were 59.7 billion US dollars, 63.4 billion US dollars, 69.98 billion US dollars, and the year-on-year growth rate also maintained 17%, 20% and 24% upward trend. But behind the growth is a bloody operating expense. Operating profit for the third quarter was $3.157 billion, down 15% from $3.724 billion in the same period last year, and the first two quarters were up 129% and 3%.
But in the earnings conference call, Amazon still showed confidence in the company’s current situation and the desire to exchange short-term benefits for long-term returns.
“Bleeding” for growth
Amazon’s third quarter revenue of 69.98 billion US dollars, of which e-commerce revenue was 35.04 billion US dollars, physical retail revenue was 4.192 billion, respectively, up and down 21% and 1.3%. Amazon hinted that the fourth-quarter profit outlook, including the holiday season, is weak, with operating profit expected to be $1.2-2.9 billion, down from $3.8 billion in the same period last year, and analysts expecting $4.3 billion, with revenue expected to be $80 billion. To the $86.5 billion range, below market expectations of $87.39 billion.
Amazon CFOBrianOlsavsky revealed in a conference call that revenues did not meet expectations, in part because the growth impact of the acquisition of WholeFoods disappeared. From the third quarter of 2017, Amazon’s quarterly revenue growth remained above 34% until the fourth quarter of 2018, revenue growth began to return to normal.
There is a real decline in net profit