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AMZN Stock Tanks 9%, Amazon Reports $3.8B Loss in Q1 2022, Cloud Business Up by 36.5%

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by Bhushan Akolkar · 2 min read
AMZN Stock Tanks 9%, Amazon Reports $3.8B Loss in Q1 2022, Cloud Business Up by 36.5%
Photo: Depositphotos

Although Amazon showed a net operating loss during the first quarter, its cloud business showed strong growth providing some cushion to the company’s overall declining revenue.

On Thursday, April 28, e-commerce giant Amazon reported its quarterly earnings for Q1 2022. The results came after the market hours wherein Amazon reported an overall $3.8 billion net loss on its balance sheet. This has been the company’s first quarterly loss in seven years since 2015.

The results disappointed the Street with Amazon.com Inc (NASDAQ: AMZN) stock crashing down 9% in the extended trading hours. On Thursday’s closing, AMZN stock was trading 4.65% up ending the day at $2,891 levels.

The major loss came due to the slowdown in the pandemic-induced online shopping. Besides, the company announced a huge writedown of its investment in electric vehicle startup Rivian. Amazon had to absorb a staggering $7.6 billion loss on its stake in Rivian.

However, one strong area where Amazon did really well, was the cloud business. During Q1 2022, Amazon’s cloud unit registered a 36.5% growth year-over-year, faster than analysts’ estimates. The strong cloud business shows demand for “computing, storage and database services” in the market.

Amazon Web Services (AWS) Post Strong Show in Q1 2022

During its quarterly earnings announcement, Amazon said that revenue from its cloud unit AWS totaled $18.44 billion. This was more than the analysts expectations of $18.27 billion. Amazon Web Services (AWS) alone contributed to 16% of Amazon’s total revenue.

Furthermore, AWS contributes to a strong part of amazon’s bottom line i.e. profits. During the first quarter of 2022, AWS clocked $6.52 billion in operating income, up by 57%. On the other hand, the company reported an total operating income of $3.67 billion. Thus, if AWS weren’t profitable, the company would have lost even more money.

During the last quarter, AWS’ operating margin widened to 35.3% from 29.8% in the previous quarter i.e. Q4 2021. Amazon Web Services has proved to be one of the top running businesses since its launch in 2006. Back in 2020, AWS emerged as the market leader grabbing 41% market share in cloud computing. As CNBC reports:

“Amazon Web Services’ revenue growth slowed from 39.5% in the fourth quarter. Meanwhile, AWS’ fiercest rivals, Microsoft’s Azure and Alphabet’s Google Cloud Platform, have maintained constant growth or decelerated slightly”.

During the pandemic period, Amazon had a very good run-up in the market. However, over the last year, AMZN stock has been showing volatility dropping 17%.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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