Shares in Amazon.com plunged by 8 per cent after the online retailer posted lower than expected third quarter profits and lowered its revenue target for the year.
Amazon forecast revenue below some Wall Street expectations for the Christmas holiday season, when it generates the bulk of its sales.
Amazon said it expects fourth-quarter sales to increase between 13 per cent and 24 per cent, well below its 31 per cent sales jump in the fourth quarter of 2004.
Sales in North America - the company's biggest market - rose 28 per cent, in what the company called its fastest growth rate in over four years. The company sold more than 1.6 million copies of Harry Potter and the Half-Blood Prince in the quarter, although the heavily discounted book was a "break-even" event, Amazon said.
Betting that it could strengthen customer loyalty and raise sales, the company unveiled Amazon Prime in February amid investor and analyst concern that the programme, which provides unlimited two-day shipping for an annual fee of $79, would boost expenses and eat up profits.
During the quarter, Amazon's net shipping loss increased 15 per cent to $47 million, primarily due to its free shipping offers and Amazon Prime, the company said.