Amazon Falls After Missing Sales Forecast (NASDAQ:AMZN)

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Amazon reported standout third-quarter earnings Thursday, but revenue and revenue guidance disappointed.

Analysts were predicting that on a per-share basis, Amazon's profit would be six times larger in the period than it had been in the same quarter a year earlier.

Amazon Web Services' net sales came to $6.7 billion for the quarter, growing 46 percent year-over-year.

The company also predicted that sales during the last three months of this year, typically its strongest quarter, would be between $66.5bn and $72.5bn, much slower growth than investors have become accustomed to in recent years. Analysts projected $US3.9 billion.

It will cost Amazon an extra $333 million to fund its higher salaries during the fourth quarter, according to Cowen, a financial research company.

Revenue from Amazon's worldwide business, which brings in 27.5 per cent of total sales, was at the heart of the shortfall in results, growth halving to 13.4 per cent compared to the previous quarter.

After falling as low $1028.77, Shares of Alphabet were down about 3 percent to $1,071.01 after hours from their close at $1103.59. Shares in Amazon were down 9 percent in premarket trading.

Revenue from Amazon's global business, which brings in 27.5% of total sales, rose 13.4 percent in the third quarter, missing estimates, and decelerating from a 27% year-on-year expansion in the previous quarter. Fourth-quarter operating income is expected to fall between $2.1 billion and $3.6 billion.

More news: Samsung phones in 2020: in-screen cameras and no bezel?!

Amazon also is investing in physical stores and the pharmacy business.

Those results were inflated by the company's acquisition of Whole Foods.

As well, Amazon expanded its Prime Video product with new original shows, launched its Prime Book Box to all of its US-based Prime customers, setup shop in Turkey, improved Alexa, and much, much more.

The company now groups its advertising group under "other" on its balance sheet.

This healthy figure represents a 122% increase year over year and a jump of $301m from the last quarter, putting Amazon on track to hit the psychologically important $10bn a year mark in annualised sales for the sector.

On the brighter side was data that showed gross domestic product increased at a 3.5 percent annualized rate in the third quarter as a tariff-related drop in soybean exports was partly offset by the strongest consumer spending in almost four years and a surge in inventory investment. Operating income was $2 billion.

Amazon's stock closed regular trading up $US117.97 a share, or 7.1%, to $US1,782.17.

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