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Amazon forecasts Q4 operating profit drop, misses Q3 diluted EPS expectations

Seattle-based e-commerce giant Inc. forecast a drop in operating income for the fourth quarter and reported third-quarter 2019 diluted EPS and net income that missed analysts' expectations.

The e-commerce giant said Oct. 24 it expects its fourth-quarter operating income to come in between $1.2 billion and $2.9 billion, which represents a drop from the $3.8 billion it posted in the fourth quarter of 2018.

For the quarter ended Sept. 30, the online retail company reported diluted EPS of $4.23, missing the S&P Global Market Intelligence mean consensus estimate for GAAP EPS of $4.55.

Amazon's net income for the third quarter decreased to $2.13 billion, compared with net income of $2.88 billion in the year-ago quarter. The third-quarter results missed the Market Intelligence estimate for GAAP net income of $2.27 billion.

Amazon's revenue reached $69.98 billion in the third quarter, up 24% compared with $56.58 billion in the third quarter of 2018. It surpassed the Market Intelligence estimate of $68.72 billion.

The company's operating income decreased to $3.16 billion in the third quarter, compared with operating income of $3.72 billion in the third quarter of 2018.

During the second-quarter earnings call, Amazon said it spent more than an anticipated $800 million on its free one-day Prime delivery program.

Jeff Bezos, Amazon's founder and CEO, highlighted the program in a prepared statement Oct. 24, saying that "customers love the transition of Prime from two days to one day — they've already ordered billions of items with free one-day delivery this year. It's a big investment, and it's the right long-term decision for customers."

Amazon forecasts its net sales for the fourth quarter to range between $80 billion and $86.5 billion. This guidance anticipates an unfavorable impact of approximately 80 basis points from foreign exchange rates.

Shares of Amazon were down 7.29% to $1,651 in after-hours trading.