Amazon sales growth slows as new CEO takes over

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Amazon's final quarter with Jeff Bezos as CEO proved to be a disappointment for Wall Street.

The e-commerce giant on Wednesday posted US$113.1 billion in revenue during the three months ended June 30, an increase of 27% from the same period in the prior year but falling short of the $115.2 billion analysts had expected. It also marks a slowdown from the 40% sales growth Amazon posted during the second quarter of 2020, despite the fact that Prime Day fell during the June quarter this year.

Amazon is also forecasting weaker sales growth in the upcoming quarter. The company predicts net sales will increase between 10% and 16% from the prior year. That would mark a notable slowdown compared to the 37% sales growth it reported in the third quarter of 2020.

Amazon shares fell more than 7% in after-hours trading following the earnings report, effectively shaving off more than $100 billion from the company's market value.

Bezos stepped down as CEO earlier this month and became executive chair. Andy Jassy, the longtime head of Amazon's cloud computing division, replaced him as CEO.

Despite the sales miss, profits beat expectations at $7.8 billion, thanks in part to the performance of Jassy's AWS, which posted more than $4 billion in profit for the quarter.

But the mixed results highlight the challenge Jassy now faces in the top spot to maintain Amazon's remarkable sales and profit growth that turned it into one of the world's most valuable businesses. Preserving the company's growth rate could be especially tricky after demand for its products and services exploded during the COVID-19 pandemic as customers and businesses leaned on Amazon's services.

Amazon's guidance highlighted multiple risks to the company, including the possibility that consumers would cut back on spending if the economy takes a hit as COVID-19 surges again. It also noted the risk of "actions taken by governments" in response to the pandemic.

Amazon is a target, along with fellow big tech giants, of a slate of new antitrust bills proposed last month by House lawmakers that could make it easier for regulators to disrupt or break up Amazon's many different business units.