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Few companies could post the best quarterly profits in its history and still see its share prices drop. Unfortunately for Amazon, it is one such organization. The online retail giant missed Wall Street expectations on Thursday, causing shares to plunge 13 percent.
Amazon’s Q4 report showed a net revenue of $35.7 billion and net income of $482 million, or £1.00 a share. This represents a 22 percent increase in revenue and a 125 percent increase in profit compared to the same period a year earlier.
Amazon Web Services, meanwhile, continues to be a huge area of growth for Amazon. AWS saw its Q4 figures improve yet again in 2015; the cloud computing platform’s revenue jumped 70 percent to $2.4 billion while its profits rose a massive 186 percent $687 million.
Despite the impressive figures and the fact that it’s the first time Amazon has reported three consecutive profitable quarters since 2012, the numbers weren’t as good as analysts had been expecting. Forecasts had Amazon bringing in just under $36 billion in sales and a net income of $754 million, or $1.56 a share, missing these targets resulted in the falling share price – down 13.43 percent to $550 per share in after-hours trading. But the shares are still up 80 percent over the past 12 months.
If you look at dollar growth rather than % growth (which I tend to), all three of Amazon’s segments are improving pic.twitter.com/A6ZtB0wijE— Jan Dawson (@jandawson) January 28, 2016
Even with the record profits, investors are still cautious about putting their money into Amazon. "By comparative retail standards, Amazon's level of profitability is still painfully weak," said Neil Saunders, head of retail analyst firm Conlumino, speaking to Reuters. "For every dollar the company takes, it makes just 0.75 of a cent in profit."
CEO Jeff Bezos didn’t appear too happy at missing the expectations, either. "Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers," he said in a statement. "And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like day one."