Amazon reports net loss of $2.7 billion for 2022
Feb. 2, 2023 Updated Thu., Feb. 2, 2023 at 7:43 p.m.
In a year that ended with drastic cost-cutting measures – from ending experimental projects to cutting 18,000 jobs – Amazon reported a net loss of $2.7 billion.
That’s compared with a net income of $33.4 billion in 2021.
Amazon has attributed losses to its investment in Rivian, an electric vehicle startup that has struggled with production delays and market upheaval. On Wednesday, Rivian said it was cutting 6% of its workforce, or about 840 jobs from its 14,000 staff count.
Amazon said its 2022 losses included a pretax valuation loss of $12.7 billion from its investment in Rivian. That’s compared with a pretax gain of $11.8 billion from the same investment in 2021.
Amazon’s net sales for 2022 increased 9% to $514 billion, compared with $469.8 billion in 2021. Excluding changes in foreign exchange rates, Amazon said net sales increased 13% year over year.
In the fourth quarter of 2022 – from October to December – Amazon’s reported net income decreased to $300 million, or $0.03 per diluted share. That’s compared with net income of $14.3 billion, or $1.39 per diluted share, for the same quarter in 2021.
During the fourth quarter, Amazon said it faced a pretax valuation loss of $2.3 billion from its investment in Rivian. In the fourth quarter of 2021, it saw a $11.8 billion valuation gain from its investment.
Amazon’s operating income decreased to $2.7 billion in the fourth quarter this year, compared with $3.5 billion in the fourth quarter of 2021. That’s due in part, Amazon said, to estimated severance costs.
Amazon began to trim costs in October when it implemented a corporate hiring freeze for its stores business, the retail division that includes online and physical stores, its marketplace for third-party sellers and Amazon’s Prime subscription service. About a month later, it froze corporate hiring almost across the board. That hiring freeze remains in place.
Last fall, Amazon also began cutting back on several projects, including delivery robots, a virtual travel experience and a video device for kids. Amazon also parked its Treasure Truck, a fleet of roving vans that offer daily discounts, and ended AmazonSmile, a decade-old charitable program that let customers pick a charity to receive a donation from the company.
In November, it began job cuts that have since affected 18,000 people.
The first wave of layoffs largely affected employees in the company’s devices organization, which includes Amazon’s voice assistant, Alexa, as well as Kindle, smart home products, Echo speakers, health device Halo and home robot Astro.
The most recent round of layoffs in January hit its human resources and stores divisions. Amazon’s Worldwide Stores business, led by Doug Herrington, is the retail arm of the tech and e-commerce giant.
The cuts affected 2,300 workers from Amazon’s Puget Sound-region headquarters – 1,852 people in Seattle and 448 in Bellevue.
Amazon offered a 60-day transitional period for all affected workers. During that time, employees are not expected to work but continue to receive a paycheck. That means the financial effects of the job cuts won’t be fully reported in Amazon’s financial data for the fourth quarter or full year for 2022.
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” CEO Andy Jassy said in a statement, pointing to Amazon’s investment in streaming entertainment, health care and broadband satellite connectivity.
Most of Amazon’s market share resides in physical stores and on-premise data centers, but that could change, Jassy continued.
“As this equation steadily flips,” he said, “we believe our leading customer experiences in these areas, along with the results of our continued hard work and invention to improve every day, will lead to significant growth in the coming years.”
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