Amazon shares drop on concerns about rising costs, India growth

"In 2018, we improved Alexa's ability to understand requests and answer questions by more than 20% through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017", Bezos said.

Shares of the company fell 1.1 per cent to US$1,700 in trading after the bell. The forecast was on the low end of analyst expectations' of about $61 billion.

For the full 2018 fiscal year, Amazon reported a net sales increase of 31 percent to $232.9 billion, up from $177.9 billion in 2017.

That investors seemed to focus more on the slowdown ahead rather than the record-setting quarter and year just completed that could mark a turning point in Amazon's story.

Colin Sebastian, an analyst at Baird Equity Research, said, "The issues in India are taking a toll on the Q1 outlook, even as growth overall slows domestically".

Amazon's profits were up dramatically year-over-year as well. The cost of stowing, packing and delivering goods increased 12 per cent in the holiday quarter to US$10 billion, in line with online sales growth of 12.5 per cent. Advertising and AWS are Amazon's fastest-growing segments, and the two are increasingly being used in tandem by marketing technology companies and ad agencies.

Ad sales and "other" revenue jumped 95 per cent to US$3.4-billion in the fourth quarter.

Additionally, the company's net income increased to $3.0 billion United States dollars (roughly $3.94 billion CAD) in Q4 2018, compared to $1.9 billion USD (roughly $2.49 billion CAD) in Q4 2017. Though its global operating loss shrunk to $642 million in the quarter from $919 million a year earlier, new regulations in India are poised to take a toll. Sales at Amazon Web Services, the top seller of cloud-computing services, climbed 45 percent to $7.43 billion, maintaining the pace of the previous period. Shares fluctuated between gains and losses in extended trading after the report and were little changed at 5:19 NY.

Market capitalization. Grew to $840 billion Thursday afternoon, more than Microsoft, Apple, or any other publicly traded company.

The results were the first to show the impact of Amazon's pay rise. The online retailer's brick-and-mortar strategy also includes bookstores and a cashierless convenience store called AmazonGo, which lets customers check in with a smartphone app and be charged automatically based on what they remove from the store. AWS accounted for 10 percent of the company's net sales in the quarter, up from 8 percent in the year-earlier period. The stock closed Thursday at $1,718.73, up 2.8 percent. With Amazon controlling 50 percent of e-commerce purchases in the U.S., more sellers have an incentive to fork over money for these ads.

  • Eleanor Harrison