Amazon’s market cap has plunged to a new low, hitting $20 billion, its worst-ever hit, as it struggles to keep up with the rising cost of its online services.
The company has been hit hard by the rising costs of its digital products and services, and the latest market cap figures showed that the total value of its products fell below $20bn in the US and $21bn in Britain, according to data from market research firm Strategy Analytics.
It has been a rough few weeks for the online giant, which has been struggling to meet its revenue targets of $10 billion to $15 billion, as a wave of online competitors including Microsoft Corp, Amazon and Netflix Inc. ramped up their online sales.
Amazon has been forced to raise prices on some of its most popular products, including the Kindle e-reader, and has been facing a raft of new competition from Google Inc., which has launched its own cloud-based service.
While Amazon’s revenue fell, the company’s net profit for the quarter was up by $7.3 billion, to $8.4 billion.
Amazon’s sales and profit grew by just 2% to $19.5 billion, and it posted its biggest quarterly profit ever, up 13% to about $9.9 billion.
The market cap of Amazon has been steadily falling over the past two years, and this year has been particularly challenging for the company, which was already struggling to survive a global slowdown in China.
The drop in the company was especially hard on US consumers, whose sales have been flat since 2014, as the price of their products has risen at a faster pace than their incomes.
In the UK, Amazon had a strong showing with its second-quarter results, with the company selling more than $1 billion worth of products and its net profit rising by 12% to just under $2 billion.
But Amazon’s biggest challenge in Europe is the rising prices of many of its e-book and music sales, as well as its online stores, which are increasingly expensive.
Amazon did not break down the impact of its new cloud-storage services on its US revenues, but analysts say the company will be forced to make some changes to reduce costs.
In its first full-year results for 2017, the e-commerce giant posted net profit of $2.2 billion, up 9% from the previous year.
But it posted a net loss of $1.7 billion, a slide of 19%.
In its second full-month results for 2016, Amazon posted a loss of just over $1bn, up 3%.
Amazon’s stock is trading around $30 a share, down from more than double the price in mid-2018.