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Supply chain issues, online shopping cool off, or missing Bezos?INTL

Supply chain issues, online shopping cool off, or missing Bezos?

Amazon (AMZN) investors got a pre-Halloween scare from the company’s third quarter earnings report. Last Thursday, the online retail giant reported a fall in quarterly earnings, with profits coming in at $6.2b compared to $6.3b for the same period last year.

On the bright side, revenue grew by 15% to $110.8b, marking the company’s fourth consecutive quarter of revenues over $100b. Amazon predicted that sales will grow to between $130b and $140b next quarter thanks to holiday spending.

Amazon’s problems have nothing to do with sales. Last quarter’s issues had to do with supply chain issues and rising costs, particularly labor costs. Amazon shelled out an extra $1b in Q3 tied to wage increases and employee incentives. The company’s average starting wage is now more than $18 an hour as well as sign-on bonuses that can be up to $3,000.

why it matters

Shares of AMZN fell by more than 2% on Friday after the disappointing earnings report. Amazon's new CEO Andy Jassy has his work cut out for him in mitigating rising costs and supply chain headaches going into Q4.