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Why Amazon shares fell after revealing a loss of nearly $ 4 billion

Amazon shares fell 10% after the market closed on Thursday after reporting disappointing earnings for the first quarter of 2022.

The Seattle-based technology company reported a net loss of $ 3.8 billion in the first quarter compared to a net income of $ 8.1 billion in the same period last year. Amazon said its first-quarter results include a pre-tax valuation loss of $ 7.6 billion due to its investment in electric car company Rivian Automotive, resulting in net loss.

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Amazon also reported Thursday that net sales rose 7% in the first quarter to $ 116.4 billion. This compares with a 44% increase over the same period last year, marking the company’s slowest growth rate in more than two decades.

In a statement Thursday, Amazon CEO Andy Jassy said the war in Ukraine and inflation and supply chain pressures have hampered its business. “The pandemic and the ensuing war in Ukraine have brought extraordinary growth and challenges,” Jassy said.

“Today, as we no longer chase physical capacity or staffing capacity, our teams are focused on improving productivity and cost-effectiveness throughout our service network,” Jassy added. “We know how to do this and have done it before. This may take some time, especially as we work through persistent inflation and supply chain pressures, but we are seeing encouraging progress in a number of customer experience dimensions, including delivery speed, as we now approaching levels not seen since the months immediately preceding the pandemic in early 2020. “

On the other hand, the company’s Amazon Web Services (AWS) cloud computing device grew by 34% annually over the past two years and 37% year-over-year in the first quarter, as the service became an “integral part of helping businesses” cope with the pandemic and move more of their workloads into the cloud, ‚ÄĚJassy added.

Looking ahead, Amazon expects net revenue to be between $ 116 billion and $ 121 billion, or to grow between 3% and 7% over the same period last year.

The company also confirmed on Thursday that its annual Prime Day will take place in the third quarter of July, which Amazon said may hurt its year-on-year comparisons in the second quarter after hosting the shopping event in June last year.

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