Amazon's sales declined more than twice as much as expected, but luckily it has many revenue streams.
👉 Background: Amazon lost a casual US$2 billion in this quarter... But investors were expecting a lot worse... And the company's shares actually spiked on this kinda good earnings news.
👉 What happened: So, what performed well? Amazon Web Services was up 33% from last year. But Amazon’s online store sales declined more than twice as much as investors expected.
👉 What else: It’s the second quarterly loss in a row and one of the slowest growth periods for Amazon in history. But luckily for Amazon, it has so many revenue streams to diversify its revenue.
💡 Diversification allows investors to reduce risk by reducing the exposure to a particular asset... or in Amazon's case, a particular revenue stream.
💡Amazon is actually a single business with several multibillion-dollar businesses within it. That diversification means it doesn’t have to rely on a single revenue stream for its success.
💡So when Amazon’s online store sales decline, it thankfully has other revenue streams to prop it up. The big question is: when does this become too big that Amazon can’t do anything well anymore?
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