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Amazon Stock Slides, Extending Historic Slump, As Analysts Pick Through Q1 Loss

Amazon shares were back in the red Monday following its biggest single-day decline since 2006 as analysts pared details of its surprise $3.8 billion first quarter loss.

Updated at 11:38 am EST

Amazon  (AMZN) -  shares extended declines Monday, following on from its biggest single-day decline in fifteen years, as analysts move to re-set price and ratings targets after the online retail giant's disappointing first quarter earnings last week.

Wedbush Securities analyst Michael Pachter, in fact, removed Amazon from its 'best ideas' list Monday, noting what he called "investment price discipline" following Amazon's surprise first quarter loss and muted near-term revenue outlook that was set against surging operating costs.

Amazon said its first quarter revenues rose 7% from last year to $116.4 billion, just ahead of analysts' estimates of a $116.30 billion tally but the slowest year-on-year growth in more than a decade, as total operating expenses rose 13.2% at $112.78 million.

That mis-match, alongside a $7.6 billion write down on its investment in EV maker Rivian  (RIVN) - , led to a surprise $3.8 billion first quarter loss, and a second quarter operating income forecast of between -$1 billion to +$3 billion on revenues in the range of $116 billion to $121 billion.

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"Labor and physical space are no longer the bottlenecks they were throughout much of 2020 and 2021. However, we continue to face a variety of cost pressures in our consumer business," Amazon CFO Brian Olsavsky told investors on Thursday. "When you combine the impacts of the externally driven costs and the internally controllable costs, you get approximately $6 billion in incremental costs for the quarter." 

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"Approximately two-thirds of these costs are within our control, and with demand normalizing, we remain focused on rightsizing our cost structure and driving out any cost inefficiencies," he added. "Our guidance includes an expectation that we will incur approximately $4 billion of these incremental costs in Q2." 

Amazon shares were marked 2.75% lower in early trading Monday to change hands at $2,417.50 each. The stock plunged 14.05% on Friday, marking its biggest single-day decline since 2006. 

Amazon Web Services was the usual bright spot in the otherwise disappointing first quarter report, with revenues rising 36.6% from last year to $18.44 billion, with a near-term order backlog of around $90 billion. The division earned just over $6.5 billion with a profit margin of around 35%.

"With slowing e-commerce sales growth, the company needs bovada revenue sources to sustain its elevated revenue growth and premium valuation multiple, in our view beyond its AWS effort, which continues to impress," said D.A. Davidson analyst Tom Forte, who lowered his price target on the group to $3,125 per share but kept his 'buy' rating in place following last weeks' first quarter update.