Amazon’s shares plummeted after the business revealed a substantial loss in the first three months of the year.

The computer behemoth reported a $3.8 billion net loss for the quarter ending March 31, a significant decline in revenue from the same period previous year, when it earned $8.1 billion. It was also a far cry from the $4.4 billion profit expected by analysts polled by Refinitiv.

The business ascribed the loss on a $7.6 billion loss from its investment in Rivian Automotive, an electric vehicle manufacturer. Rivian’s stock has dropped more than 75% since its blockbuster November 2021 IPO launch, despite Amazon’s $700 million investment.

Following the results, Amazon (AMZN) stock dropped approximately 10% in after-hours trade.

In a statement, Amazon CEO Andy Jassy stated, “The pandemic and ensuing war in Ukraine have brought unexpected growth and challenges.”

Amazon’s overall revenue increased 7% year over year to $116.4 billion, slightly surpassing analyst expectations but falling short of the 9 percent growth seen in the latter months of last year. The company expects sales growth to decrease even more in the coming quarter, with a pace of between 3% and 7% expected.

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During the event, Jassy mentioned Amazon’s rapid expansion in the consumer sector, as well as the “doubling” of the company’s fulfillment network in the last two years.

“Now that we aren’t pursuing physical or staffing capacity, our teams are solely focused on increasing productivity and cost efficiency across our fulfillment network,” he added. “While we are working through continued inflationary and supply chain constraints, we are seeing positive progress on a number of customer experience measures.”

Prime Day, Amazon’s annual sales bonanza, will take place in more than 20 countries this July, according to the company.

Amazon’s chief financial officer, Brian Olsavsky, said on an earnings call that increased inflation, gasoline prices, and labor shortages added $2 billion to costs compared to the previous year.

“In comparison to pre-pandemic prices, the cost of shipping an overseas container has more than doubled,” he stated. “The cost of fuel is approximately one and a half times higher than it was even a year ago.”

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According to Olsavsky, the rise of the Omicron version towards the end of 2021 resulted in “a significant surge” in employees taking leave, causing Amazon to increase hiring to compensate for the absences. “We swiftly moved from being understaffed to being overstaffed,” he noted, when workers returned as the variants subsided. According to him, this resulted in “reduced productivity,” resulting in an additional $2 billion in costs.

Amazon’s earnings decline comes as the business continues to face pressure from warehouse workers over wages and working conditions. Workers at an Amazon facility in Staten Island, New York, voted earlier this month to form the company’s first-ever US labor union. Amazon has since filed an appeal, requesting that the entire vote be redone.

A separate Amazon union election was recently held in Bessemer, Alabama, with results that were too close to call.
Both union movements were driven in part by rising national attention to racial justice concerns and labor rights, as well as worker discontent with Amazon’s handling of workers during the pandemic.

Following that, Amazon said that it would perform a racial equity audit overseen by Loretta Lynch, the former US Attorney General.

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