Amazon forecasts holiday sales, reports $42.4 billion cash burn

Amazon.com said on October 29 that it expects fourth-quarter revenue between $240.0 billion and $247.0 billion, while reporting cash burn of $42.4 billion over the trailing 12 months through the September quarter. Analysts had forecast holiday-quarter sales of $244.51 billion, based on estimates compiled by LSEG.

Shares fell about 5% in extended trading after closing the regular session at $243.79, down 4.3%. Jesse Cohen, a senior analyst at Investing.com, attributed the decline to Amazon’s free cash flow and weak guidance.

Amazon said capital expenditure of $77.26 billion drove the cash burn. That spending exceeded analyst estimates by some $20 billion, according to LSEG data. The company had reported cash burn of $7.6 billion in the preceding quarter, compared with cash generation of $14.8 billion in the third quarter a year earlier. It kept its annual capital spending projection at about $220 billion.

Amazon Web Services posted third-quarter revenue of $46 billion, a 39% increase. Analysts had expected $45.61 billion, representing growth of 38.2%, according to LSEG. The cloud business had grown 37% in the second quarter, and its latest expansion was the fastest in nearly five years.

Retail remains Amazon’s largest source of revenue. The company has been extending faster delivery options internationally and reaching more rural U.S. areas as it seeks to attract shoppers.