Amazon shares have often fallen after its earnings announcements. In fact, the stock has sunk no less than 9.6 percent in the day after earnings over the past three quarters.
Analysts had expected Amazon.com to report a quarterly loss of 74 cents per share on $20.84 billion in revenue, according to a consensus estimate from Thomson Reuters. It was the seventh time in nine quarters that the company had missed expectations.
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"This loss is a hard one to swallow. This is going to make it tough to justify that we're investing in the future, when the loss is this big," said Lou Basenese, founder of Disruptive Tech Research.
Amazon's guidance for the fourth quarter was also below expectations. The firm said that it expected sales of between $27.3 billion and $30.3 billion, while Wall Street was looking for $30.39 billion. The low end of the company's sales guidance for the fourth quarter is more than $2 billion below analysts' most pessimistic estimate.
"They've been guiding and delivering 20 percent top line growth for at least 5 quarters and now they're going to guide below that," Basenese said. "That's really been the story, (Amazon says) we're going to grow the top line really aggressively—it's going to cost us a lot of money but don't worry, we'll turn on the profit spigot at some point. Now that story is starting to crumble. "
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Still, the Thursday earnings announcement may not result in any immediate changes in the company's strategy.
"Amazon is going to keep spending a lot of money because you have (CEO Jeff) Bezos in control. I don't care how many activist investors show up. This stock is all about Bezos and his vision," said Zachary Karabell, columnist and author.
The online retailer highlighted in its earnings announcement that its operating cash flow increased 15 percent to $5.71 billion for the trailing 12 months, compared to the same time last year.
Amazon Chief Financial Officer Thomas Szkutak said in the conference call after the announcement that one of the company's main financial goals is to "maximize free cash flow over the long term."
Szkutak also admitted that the retailer has been in "investment mode" over the past several years, but said that "we know that we have to be very selective about what opportunities we pursue."
The company has made a recent string of investments that stand to affect the company's growth for years to come. These include Amazon Fresh, the same-day delivery service competing with the likes of Fresh Direct, and the nearly $1 billion acquisition of Twitch.
Amazon also spent about $100 million in the third quarter on its original programming endeavors, Szkutak said.
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Heading into the key holiday shopping season, Amazon will face heightened competition from retailers such as Target, which just announced it will offer free shipping on all online orders through Dec. 20 and same-day pickup within an hour.