The world’s largest online retailer Amazon.com reported losses at the end of second quarter despite the 22% increase in revenue, pushing investors to loose patience.
Amazon’s primary focus has long been on using revenue to build the business and offer consumers the widest variety of products and services all under one website. The future-minded strategy has allowed Amazons primary investors to forgive the slim to no profit margins but patience is wearing thin as the company produced negative revenue in 2013 second quarter.
Large quantities of its 22% revenue increase were spent on order fulfillments and investments in digital content rights, pushing sales into the red. To date investors have ignored small profits and focused on the company’s solid growth and future potential as a highly lucrative business venture but showing losses have produced added doubt for the companies ability to generate solid investment returns.
Amazon’s revenue grew 22% to a total of $15.7 billion up from $12.83 billion which should have produced approximately 5 cents per share. However operating costs jumped 23% to $15.63, up from the $12.73 billion used in second quarter 2012 which created a 2 cent per share loss.
The company’s stock dropped 1.8% falling $5.40 to a total of $298 after results for second quarter released the unpleasant news of Amazon’s losses. This drop is a refection that the patient of investors is beginning to dwindle as many continue to wait for a solid return.
Amazon has continued to improve its consumer experience however with the introduction of such products as the Kindle Tablet and E-reader, currently popular sellers on the site, as well as many exclusive book titles produced strictly for these electronic reading devices. Business has expanded into many news venues, offering consumers services such as grocery delivery services and even movie streaming capabilities directly into E-reading devices.
The company faces even more challenges this quarter as questions to tax laws are raised in several of Amazons operating areas such as Europe. G20 nations have begun collaboration on new agreements to close the international taxes laws which could generate more expenses for Amazon in the near future.
As 3rd quarter begins, Amazon has projected revenue of up to $17.15 hoping to assure investors that profits are on the horizon. Meanwhile the company looks forward to the future and additions of even more product lines and services in upcoming months.
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