Amazon Sheds Profits to Fuel Its Incredible Expansion

Amazon founder and CEO Jeff Bezos got the opportunity to be the richest man in the world for a brief period of time this Thursday. As Amazon shares hit a record high of $1,083.31 yesterday, he pushed ahead of Bill Gates for a little while, before the shares took a 3.2% tumble in after hours trading. Hopefully he enjoyed the taste of being the number one tech billionaire; it seems likely that he will reach that peak again someday in the near future. Bezos’ ambitions for Amazon have only grown, and the company is only becoming more and more integrated into consumer’s lifestyles. The release of the online shopping empire’s second-quarter earnings paint an extreme picture of a company willing to put that old proverb, “You have to spend money to make money” to the test. But as in the past, Amazon is mainly in the spending money part of the equation at the moment.

According to the report, Amazon’s quarterly income fell 77%. General and administrative costs have rocketed up 50% as the company puts all of its faith (and a whole heap of money) into its Prime operations. The company is betting that over time, investing wildly in accelerated shipping and streaming video will pay off big time. For mobile app developers hooked on The Man in the High Castle and free two-day delivery, it seems like this business model just might work.

If the goal is ubiquity, Amazon is already succeeding. Its second-quarter revenues are up 25% from last year, bringing its quarterly revenues figure to a stunning $38 billion. Prime subscriptions are up 51%, and analysts are predicting that more than half of American households will be Prime members by the year’s end. For a company already so well-established, that level of growth is insane. But as Seattle mobile app developers know, Bezos and the Amazon crew are never willing to stop at simply insane growth — the company has to keep expanding. With its recent purchase of Whole Foods, its continued investment in the Asian market, and the triumph of its cloud services business (the largest in the world, with $4.1 billion in sales this quarter), Amazon’s impossible ascension continues, profits be damned.