Investing.com – Amazon (NASDAQ:AMZN) stock fell nearly 5% in Friday’s premarket trading as the online retail giant warned it could end up making nothing in operating profit in the current quarter as the company grapples unprecedented costs to meet demand in a busy holiday season.
Operating income in the third quarter was $4.9 billion.
CEO Andy Jassy said the company expects to incur several billion dollars of additional costs in its consumer business as it grapples with labor shortages, higher wages, global supply chain issues and costlier freight and shipping costs.
The company’s dire forecast comes even as it predicted at least $130 billion of sales during the period.
Sales could touch $140 billion while operating profit would hit not more than $3 billion, less than half 2020 quarter’s $6.9 billion, according to the company’s projections for the October-December quarter.
Just about every section of the company has benefited from the pandemic-driven demand as more consumers shopped online for clothes, gadgets and books and corporates sought its Cloud services to run their operations in a world scared to step outside. That scorching growth was going to slow at some point, but before it does the company is struggling with labor and supply challenges, both at its own end and at its customers.
Net sales in the third quarter rose 15% to $110.8 billion in the third quarter. Net profit of $3.2 billion was about half of last time’s. Both fell short of estimates.
Amazon's Cloud computing division, where it competes with other giants like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), grew 39% to $16.11 billion.