Amazon's Free Cash Flow Goes Negative Amid Record Capital Spending

Amazon's free cash flow has turned negative for the first time in recent history. According to its quarterly filing, over the twelve months ended June 30, Amazon generated $161.4 billion in operating cash flow but spent $169.0 billion on property and equipment, resulting in a negative free cash flow of $7.6 billion. This marks a significant shift from last year's positive free cash flow of $18.2 billion.

The company's capital spending has increased by 64% over the past year, exceeding its operating cash generation. Amazon has been using debt and financing markets to fund its expansion plans, taking in approximately $75.2 billion in the process.

Despite this development, Amazon's shares rose 1.27% on Monday to $261.91, making it the least damaged megacap in the market. The company's stock has declined by only 8.8% from its 52-week high, whereas other tech giants such as Apple and Alphabet have seen larger declines.

Amazon's business continues to grow rapidly, with net sales reaching $200.6 billion in the quarter, a 19.6% increase from last year. The company has chosen to prioritize investment over cash flow generation, which some investors may view as a concern.