NEW YORK (AP) – Amazon’s push for faster delivery is hurting its profits.
The online retailer said third-quarter profit fell 26% from a year ago, missing Wall Street expectations. Its stock sunk 6.5% in after-hours trading.
Amazon is moving to cut its delivery time in half, to one day instead of two, for Prime members who pay $119 a year. The company said that it’s costing the company about $1.5 billion to make the switch, nearly double what it expected.
“It’s a big investment, and it’s the right long-term decision for customers,” said Amazon CEO Jeff Bezos, in a statement.
The Seattle-based company reported net income of $2.1 billion, or $4.23 per share, in the quarter ending Sept. 30. That’s 36 cents below what analysts expected, according to FactSet.
Its revenue, however, beat expectations, rising 24% to $70 billion.