Amazon on Thursday reported it had lost nearly $4 billion in the first three months of 2022, news that sent its stock price tumbling down about 10%. 

In the first quarter of 2021, Amazon recorded net income of $8.1 billion, or $15.79 per diluted share. This year, it reported a net loss of $3.8 billion, or $7.56 per diluted share.

“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” CEO Andy Jassy said in a statement Thursday. 

Amazon attributed part of that shortfall to its investment in electric vehicle startup Rivian Automotive. Rivian’s shrinking valuation, which last fall briefly held a market capitalization larger than Volkswagen’s, caused a $7.6 billion loss for Amazon. (Chief Financial Officer Brian Olsavsky reminded shareholders on the call Thursday that its investment in Rivian resulted in a nearly $12 billion gain in the last quarter of 2021.) 

After two years spent increasing its physical footprint and warehouse capacity to handle an influx of customer orders, Amazon also now says it might have too much room.

As Amazon’s consumer business grew 23% annually over the past two years, space and labor constraints led to a bottleneck that prevented Amazon from getting customers their packages quickly. 

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To address that pinch, Amazon has doubled its fulfillment network and its employee headcount. Its headcount peaked this quarter with 1.7 million employees, before dropping to 1.6 million people. 

Amazon is again approaching pre-pandemic delivery speeds, Jassy said Thursday.

“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” he said. “We know how to do this and have done it before.” 

But Amazon plans for new warehouse space months or years in advance, Olsavsky said Thursday, and it was already looking to slow its pandemic rate of expansion. The company is now “challenging” those plans again as it reacts to what it sees as too much space. 

“We feel good about everything the customer sees,” he said. “We’re working hard on the back end because the cost penalties are large right now.” 

Surplus space in its fulfillment and transportation network added an extra $2 billion in costs this quarter, Olsavsky said. 

“We have too much space right now versus our demand patterns,” he said. “We’re using the space we put in place in the last two years in a very different environment. … Now, the job’s on us to slow down our build and catch up to the capacity we have.”

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Net sales in the first quarter of 2022 were up 7%, to $116.4 billion, compared to $108.5 billion in the same time period last year. Taking out the impact from changes in the foreign exchange rates, Amazon says sales are up 9%.

Olsavsky said Amazon hasn’t yet seen the impact of inflation on customers’ buying decisions but it is cognizant of the environment. “It could go one of two ways,” he said, with customers turning more toward online sales in an effort to save money or turning away from purchases altogether.

“We don’t see any macroeconomic factors generally in this forecast on the demand side,” he said. “We definitely see it on the cost side.”

Amazon reported operating expenses of $112.7 billion, up from $99.6 billion a year ago. Expenses for fulfillment totaled $20 billion, while technology and content accounted for $14.8 billion. The company saw an extra $6 billion in unexpected costs over the quarter, Olsavsky said Thursday, building on a trend that saw $4 billion in costs added at the end of last year as well.

Internal costs, like lack of productivity due to employees calling out sick amid another wave of COVID-19, added about $2 billion. External costs — including inflation, the impact of pandemic-related shutdowns in China and increased shipping and fuel prices — added another $2 billion.

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Extra space in its fulfillment and transportation networks made up the last $2 billion.

Part of what’s happening today is seasonal, Olsavsky said. Demand is always highest in the fourth quarter of the year, leading to capacity increases that may seem unnecessary in the first quarter of the next year. 

But this year, the flip is “elevated,” he said. 

For the next quarter of 2022 — the three months from May to July — Amazon expects it could see a loss of $1 billion or operating income of $3 billion, compared to operating income of $7.7 billion in the same quarter of 2021. It expects net sales to grow between 3 and 7% year over year to somewhere between $116 billion and $121 billion.

An earlier version of this story included a graphic that misstated Amazon’s earnings per share during the first quarter of 2022, which were -$7.56 per undiluted share.