Amazon.com Inc. (NASDAQ:AMZN) stock was down 12 percent Friday morning from Thursday's close after the e-commerce giant missed earnings targets by a wide margin. Amazon, which will begin selling its Fire Phone Friday, has seen its stock drop 10 percent so far in 2014.
The huge e-merchant turned in a loss of $126 million on Thursday, compared to $7 million a year ago. Its loss of 27 cents per share nearly doubled Wall Street's expectation of 15 cents. Total operating expenses jumped by 24 percent to $19.36 billion.
Amazon also warned customers that it expects an operating loss of $810 million and $410 million for the third quarter, which ends in September. The company reported a loss of $25 million over that same period in 2013.
The second-quarter losses, the largest since 2012, come as the company has prepared to launch the Fire smartphone and other products that aim to compete with Google Inc. (NASDAQ:GOOG), Apple (NASDAQ: AAPL) and Netflix (NASDAQ:NFLX).
Yet the forecast for Amazon and its investors is far from doom and gloom. The company is investing heavily in new opportunities, Chief Financial Officer Tom Szkutak told Reuters, including $100 million on original video content in the third quarter alone. Disappointing stock numbers could also change with Friday’s release of the highly anticipated Fire smartphone.
“We’re going to continue to invest on behalf of customers with the understanding that long-term has to come,” he said. “We’ll obviously be looking to get great returns on investor capital and high amounts of cash flow.”
Yet some said consistent losses are part of the bargain with Amazon. “Amazon is not going to turn a profit. We already know that,” Keith Bliss, senior vice president and director of sales & marketing at Cuttone & Co. Inc., told IBTimes ahead of Amazon’s earnings announcement. “The metric that everybody looks for is their year-on-year revenue growth.”