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wrote a post05/05/2022 23:27

Web Services are still growing at a rapid pace

$Amazon(AMZN.US)$ One of the main highlights of the Q1 report was that Amazon Web Services (AWS) grew 34% on an annualized basis over the past two years and 37% year over year in Q1. That continued strong growth helped the company keep its overall net loss to $3.8 billion for the quarter. The net loss was attributed to several factors, including currency exchange rates, increased employment costs, and inflationary pressures. All tend to be short-term issues rather than long-term problems.
AWS is generating a 35% margin, up from 29% in the fourth quarter, and the profitability of AWS is helping subsidize the expansion efforts in other parts of the company in areas like health services, media, gaming, music, and esports. Those smaller segments have been a drain on the bottom line. Some investors are questioning whether Amazon needs to tighten its focus a bit.
The big lowlight of the report was an update on Amazon's investment in $Rivian Automotive(RIVN.US)$ . The Rivian share price decline was responsible for over $7 billion of pre-tax losses for Amazon. The stock could drop further, but with Rivian's current share price sitting 62% below its IPO price, it's not likely to fall as far in the next quarter. Investors should note that Amazon's original out-of-pocket investment in Rivian was around $1.3 billion, not $7 billion. If Rivian's shares bounce back, it will turn this quarter's losses into next quarter's gains.
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