Amazon plunges on earnings miss

Amazon disappointed investors when it posted third quarter earnings after the bell Thursday. With an adjusted earnings per share of 52 cents, this was well beneath the expected 78 cents. The stock quickly fell at least 6 percent in after-hours trading. Revenue of $32.7 billion was in line with what Wall Street was expecting.

The miss came as a surprise because in recent years the company has significantly improved its financials. For a long time, Amazon was seen as an example of an unprofitable business that could maintain investor enthusiasm because the market believed in Bezos’ long-term vision and stuck along for the ride.

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In its continued shift beyond e-commerce, Amazon’s web services business has increasingly become a core strength of the company, bringing in $3.23 billion in revenue this quarter, up from $2.09 billion in the same period last year. While there is competition from Microsoft and Alphabet, AWS has continued to attract big businesses like Pinterest, Slack and Airbnb, which use it to power their websites.

While the company has had a spate of Amazon-branded product failures, including the Fire Phone, its voice-activated Echo product has been a hit. The newer Echo Dot is a smaller version, which can still play music, Google answers to questions and power smart-home devices.

“Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now,” said Amazon CEO Jeff Bezos in a statement about the digital assistant.

Amazon has also been expanding AmazonFresh, its grocery business.  And they  have rolled out additional partnerships with its Dash button business, which makes it easy to reorder household products.

Amazon Prime customers, who pay $99 per year, are entitled to two-day free shipping and content streaming, including music and television. Members also participated in the company’s made-up discount holiday, Prime Day, which occurs in July.

As it gears up for the holiday season, Amazon issued fourth quarter guidance, with net sales between $42 billion and $45.5 billion.

Shares have been up nearly 37 percent in the past year and closed Thursday at $818.36.