Amazon stock sagged more than 4% on Friday after the initial euphoria over the company’s surprise earnings was tempered by the e-commerce giant’s warning over its cloud business.
The Seattle-based goliath saw its shares price soar by as much as 12% in after-hours trading on Thursday, but those gains were erased following a conference call in which the company revealed weak growth in its cloud division, Amazon Web Services.
In its most recent earnings report, AWS revenue rose by 16% in the first quarter to $21.4 billion — the weakest rate of growth since Amazon started measuring the division’s numbers.
The drop in the share price followed remarks by Chief Financial Officer Brian Olsavsky, who told analysts that cloud customers kept trying to slim down their bills as of the second quarter and that Amazon was helping them do so to build long-term relationships.
That meant revenue growth rates were about 5 percentage points lower in April than in the first quarter, he said, referring to a period that saw a sequential drop.
The stock was down 4.3%, at 105.11 at 10:12 a.m. ET.
The Jeff Bezos-founded company had reported stronger-than-expected revenue and profits for the first quarte after Thursday’s bell.
Amazon said it pulled in $127.4 billion in revenue for the January-March quarter, a 9% growth compared to the $116.4 billion it reported during the same period last year.
Analysts surveyed by FactSet had expected $124.6 billion.
Amazon also reported $3.2 billion in profits, or 31 cents per share, higher than the $2.24 billion industry analysts had expected.
It’s also was a strong improvement from the same period last year, when the e-commerce giant reported its first quarterly loss in years,mainly driven by a loss in value of its investment in the electric vehicle company Rivian Automotive.
The turnaround comes amid this week’s move to begin laying off some 9,000 workers as part of Amazon’s previously announced reduction of headcount.
Staffers from human resources as well as AWS were said to be most affected by the layoffs.
The layoffs were on top of the 18,000 job cuts that the company announced earlier this year and late last year.
Amazon reported no growth in the first quarter in its online retail business.
The unit grew by 3% excluding foreign exchange rates, according to Amazon’s calculations.
Company executives have said shoppers have become more conscious about their spending and are trying to save costs when they can.
On top of that, many shoppers have let go of their pandemic-fueled reliance on e-commerce, which led Amazon to report record revenue figures at the time.
With Post Wires