Amazon.com Inc., the biggest US online retailer, posted second-quarter figures on Thursday, revealing a net loss after intensive investments hurt margins despite a sizable increase in revenue.
The company reported a second-quarter loss of $126 million, which is more than double of Amazons previous estimates. Sales, however, increased by 23% and reached $19.3 billion. The company reported that its costs over the period rose by 24% and reached $19.4 billion.
“We continue working hard on making the Amazon customer experience better and better,” said Jeff Bezos, founder and CEO of Amazon.com, in the companys statement. “We’ve recently introduced Sunday delivery coverage to 25% of the U.S. population, launched European cross-border Two-Day Delivery for Prime, launched Prime Music with over one million songs, created three original kids TV series…[etc].”
The losses posted by the online retailer are considered a mark of the large investments made by the company in its new businesses and services. In 2014 Amazon has launched an entire series of new offerings, including unlimited e-book rental, streaming services, and even its first smartphone and set-top box.
“All of us understand making investments, and then there’s a point where investors don’t know what the payoff is,” Michael Pachter, analyst at Wedbush Securities Inc., said for Bloomberg. “What if they get to $200 billion in revenue and still don’t have profit?”
The company also projected an operating loss in the current period of as much as $810 million.
Amazon.com Inc. was 0.13% up to close at 358.61 dollars per share yesterday, marking a one-year change of 19.96%. However, the price has fallen some 10% so far in 2014. According to information published on CNN Money, the 38 analysts offering 12-month price forecasts for Amazon.com Inc. have a median target of $420.00, with a high estimate of 500.00 and a low estimate of 330.00. The median estimate represents a +17.12% increase from the last price of 358.61.
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