We're used to reports of Amazon exceeding expectations. The company has broken earnings records for the last three consecutive quarters, but even though it showed a profit in its third-quarter report, the figures were well below what analysts were expecting.
Amazon's revenue of $32.71 billion was in line with Wall Street's estimates, but its adjusted earnings per share of 52 cents fell short the expected 78 cents a share. Net income, meanwhile, was $252 million; the sixth straight quarter Amazon has made a profit, but a significant decline from the $857 million it posted in the second quarter of this year.
Amazon Web Services continues to be a huge success for the online retail giant. Its cloud computing business generated $3.23 billion in revenue, up 55 percent from same period last year - its largest growth ever.
The company's outlook for the fourth quarter - traditionally its biggest - was also lower than expected. Amazon predicts Q4 sales of between $42 billion and $45.5 billion, whereas analysts were expecting $42.18 billion to $46.27 billion.
Increased investment in fulfillment centers and video content is partly responsible for the decline in profits. "We are in a period of advancing up our investments in the second half of 2016, even more so than in prior years," said Amazon CFO Brian Olsavsky.
Amazon said it expects to take on 120,000 employees to fill seasonal job positions over the holidays. Last year, it moved 14,000 of these workers into permanent, full-time roles. The company hopes to do the same for a higher number of seasonal staff this time round. Amazon had over 360,000 employees at the end of the quarter, up 38 percent YoY.
Missing out on expectations caused Amazon's stock to drop 6 percent after hours, taking it below the $800 per share milestone it recently passed. As a result, CEO Jeff Bezos saw his net worth drop by $3.2 billion to $67 billion, but he remains the second richest individual in the US behind Bill Gates and ahead of Warren Buffett.