Amazon expects to continue losing money as CEO Jeff Bezos keeps spending on new ventures

By Daniel S Levine,

At some point, you have to pay for giving customers everything they want, a lesson Amazon CEO Jeff Bezos is learning the hard way. Amazon posted its second quarter numbers, which showed a growth in sales. But the only number the business world is zoning in on is the $126 million net loss and that is only expected to get bigger in the next quarter.

Amazon said that net sales during the quarter were up 23 percent to $19.34 billion, a significant increase over the $15.70 billion made during the same time last year.

However, that net loss was huge. Amazon spent $126 million, compared to just $7 million during the same time in 2013. According to The Verge, the company is expecting the net loss to grow even bigger in the next quarter, to anywhere between $410 and $810 million.

That means that amazon has a big problem on their hands. How long will investors stay with the largest Internet retailer if Bezos and his team keep spending this way? Bloomberg reports that shares have fallen 10 percent already today.

“All of us understand making investments, and then there’s a point where investors don’t know what the payoff is,” Michael Pachter of Wedbush Securities Inc. told Bloomberg. “What if they get to $200 billion in revenue and still don’t have profit?”

Back in March, Amazon did raise the annual fee for Amazon Prime to $99 a year, but that’s not going to help pay for all its new ventures, including Prime Music, the new Fire Phone and Amazon Studios original shows.



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