SAN FRANCISCO (AP) — Amazon.com Inc. reported a surprise loss in the second quarter, as higher revenue was not enough to make up for rising operating expenses. The world's largest online retailer has been spending heavily on order fulfillment and digital content rights, which continue to weigh on profit margins.
Amazon has long focused on spending the money it makes to grow its business and expand into new areas from movie streaming to e-readers and even grocery delivery. Investors have largely forgiven thin profit margins and zeroed in on the company's solid revenue growth and long-term prospects.
But such patience won't last forever. Seattle-based Amazon's stock fell $5.40, or 1.8 percent, to $298 in extended trading after the results came out.
BGC Financial analyst Colin Gillis said that while investors have been "rewarding Amazon for its investment cycle," the clock is ticking and Wall Street is looking to start reaping the rewards.
Amazon, which also makes the Kindle tablets and e-reader devices, said Thursday that its loss was $7 million, or 2 cents per share, in the April-June quarter. That's down from earnings of $7 million, or 1 cent per share, a year ago.
Revenue rose 22 percent to $15.7 billion from $12.83 billion.
Analysts, on average, were expecting earnings of 5 cents per share on revenue of $15.73 billion, according to a poll by FactSet.
Operating expenses rose 23 percent to $15.63 billion from $12.73 billion a year ago.
For the current quarter, Amazon is forecasting revenue of $15.45 billion to $17.15 billion. Analysts were expecting $16.97 billion.