Amazon’s shares traded sharply lower in after-hours trade on Thursday, negatively affected by the release of mixed results. During the second quarter, revenues increased by around 25% to $37.96bn, beating estimates of an uptick to $37.18bn. This increase was partly due to a strong performance from Amazon Web Services, which also surpassed expectations. However, Amazon reported a large miss in earnings, with its adjusted earnings per share coming in at only 40 cents, sharply lower than the $1.42 per share expected. This miss however was mainly due to the group’s investment into a number of new areas.
A regulatory filing by Whole Foods on Friday showed how Amazon had made it clear that it would not engage in any deal which involved other future bidders. Whole Foods’ shares had traded slightly higher than Amazon’s $42 per share offer in the days following the original acquisition announcement, but have since declined as investors came to terms with the fact there would be no rival offers. This comes after Whole Foods agreed to forego the auction process, despite having received interest from other parties. Amazon also notified Whole Foods that it was considering other alternatives and would terminate all negotiations if there was any leak of its interest in Whole Foods.
Amazon gained 0.47% yesterday to close the session off at $757.18 per share. It was helped along by news the group might be considering an offer for the bankrupt American Apparel. The distressed group, which was founded by Dov Charney in the late 1990s, went into bankruptcy for the second time in November last year, weighed down by $177mn worth of debt. As it stands, any successful offer would have to top a $66mn bid by Canadian apparel maker, Gildan Activewear. Lastly, if Amazon were to acquire American Apparel, it would mark a major push for the group, which is primarily an e-commerce business, into branded fashion and clothing.
In US earnings news, AIG gained 1.38% during Monday’s normal session, but fell more than 3% in after-hours trade, following the release of its first quarter results. For the period, AIG reported adjusted earnings of 65 cents per share, down from $1.22 per share a year ago. This was sharply lower than analysts’ expectations of a decline to $1 per share. Overall, the group posted a net loss of $183mn, compared with a net income of $2.5bn in the first quarter of 2015. The company said the falling earnings can be attributed to “the negative impact of market volatility on investment”. Despite the drop in earnings, investors took heart from the progress made in cost-cutting as general expenses fell by 5%, compared to the previous corresponding period. The group’s shares have fallen 8% in 2016 and are flat over the past twelve months.
Amazon.com followed Facebook’s lead, as the e-commerce giant easily surpassed first quarter estimates. For the period, Amazon recorded revenue of $29.13bn, up from $22.72bn a year ago and higher than expectations of $27.98bn. In addition, the group, which is famous for reporting losses, recorded its fourth straight quarter of earnings. Earnings came in at $1.07 per share, up from a loss of $0.12 a year ago and sharply higher than estimates of 58 cents per share. The company gained more than 10% in after-hours trading, but still remains around 11% lower for the year-to-date.