Prime Is Amazon's Profit Killer

Amazon.com's revenue continues to climb, jumping 22% in the most recent quarter to $12.8 billion. But the company lost money, and the biggest reasons were a 35% rise in fulfillment costs and a 47% jump in technology and content. Both of these costs are due to Amazon's Prime service, and while Prime is fueling growth, it's also killing profits. Long-term, that poses a challenge for investors, who have to begin wondering when Amazon will make a profit.

What Amazon is really trying to do is grow so large it blocks out possibilities for its competitors. The ability to give up short-term profits for long-term growth has, so far, given the company a leg up in retail along with a few other companies. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

The article Prime Is Amazon's Profit Killer originally appeared on Fool.com.

Fool contributor Travis Hoium is short shares of Amazon.com. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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