After spending one day as the world’s richest man, Amazon CEO Jeff Bezos is watching shares drop in price considerably in pre-market trading today. Last night Amazon announced its profits for the most recent quarter were a mere $628 million on revenues of $38 billion. That’s a 1.7% margin.
Despite generating over $900 million in profits from its Web Services segment, Amazon’s international retail operations lost money, dragging profits down to $628 million for the quarter.
Shira Ovide writes at Bloomberg that despite the poorer than expected performance, Jeff Bezos is doing exactly what he has said he would. She writes:
Again, though, Amazon is exactly the company it promises to be. It plows almost every last cent of sales back into fueling Bezos’s outsized ambitions. He is taking over a huge supermarket chain, for goodness’ sake. That is the strongest signal investors can get that Amazon is in expansion mode and wading into some unusual places.
Either you believe Amazon deserves the benefit of the doubt — and I do — or you don’t. Yes, Amazon needs to give investors a better explanation for how it plans to win in physical grocery stores, online entertainment and other areas. And some investors are justifiably getting nervous about the stretching valuations of Amazon and other tech titans after big stock gains this year.
But Amazon is Amazon. It’s grabbing revenue and market share at the expense of all other priorities. Don’t pretend Bezos is going to wake up tomorrow and run his company to squeeze fat profits.
Read more here.