Amazon's strategy has long been to invest most of the money it makes back into its businesses, particularly by expanding offerings in its $99-a-year Prime loyalty program and its cloud-computing business, called Amazon Web Services. After operating at or near a loss for years, it has finally also demonstrated the ability to turn a consistent profit recently.
Yet it wasn't able to match investor expectations in the fourth quarter. The Seattle company's profit more than doubled to $482 million, or $1 per share, from $214 million, or 45 cents per share last year. But that fell far short of the $1.55 analysts expected, according to FactSet.
Shares sank 14% in aftermarket trading. Amazon's revenue rose 22% to $35.75 billion from $29.33 billion last year. That figure also fell short of estimates, which averaged $39.9 billion.
For the current quarter ending in March, Amazon said it expects revenue in the range of $26.5 billion to $29 billion. Analysts surveyed by Zacks had expected revenue of $27.47 billion.
Amazon shares have declined 6.5% since the beginning of the year, while the Standard & Poor's 500 index has fallen slightly more than 7%. In the final minutes of trading on Thursday, Amazon's stock hit $632.20, having more than doubled in the prior 12 months.