Amazon reported weaker than expected forecasts for the pre-Christmas season causing a 12 percent stock fall and shocking investors on Wednesday.
The weaker outlook was attributed to the investment Amazon had spent on its new Kindle Fire tablet computer.
The stock tumbled 12 percent Tuesday in extended trading as the news raised concern that Amazon was losing some of the revenue momentum that had helped investors overlook its razor-thin profit margins.
In addition to releasing the Kindle Fire, Amazon also released a new range of Kindle ereaders, including a touch-screen Kindle and a new cheaper keyboard-less Kindle.
Amazon forecast fourth-quarter revenue of £10.19 billion ($16.34 billion) to £11.66 billion ($18.65 billion), compared with analysts' average estimate of £11.35 billion ($18.15 billion) as compiled by Thomson Reuters I/B/E/S.
Amazon's forecast would mean 27 to 44 percent growth from a year earlier. In the third quarter, sales grew 44 percent, less than the 51 percent gain in the second quarter.
The company also said it could report a £125 million ($200 million) operating loss to a £156 million ($250 million) operating profit in the holiday quarter as it spends on the Fire and other initiatives. Amazon is now boosting production of its Kindle Fire tablet, thanks to immense pre-order demand.
Amazon said on Tuesday its third-quarter net income was £39.4 million ($63 million), or 14 cents a share, versus £144.5 million ($231 million), or 51 cents a share, a year earlier. Revenue was £6.8 billion ($10.88 billion), up 44 percent from the third quarter of 2010, it added.