In another development, Amazon's guidance on huge losses for the quarter turned out to be accurate, USA Today reported.
However, the size of the loss and a forecast that warned of more losses by year's end spooked investors, who had already sent shares sharply lower for the year.
According to the Seattle-based online retailer, it suffered a net loss of $437 million for the quarter, or 95 cents a share, as against $41 million, or 9 cents a share, in the year-ago quarter.
Analysts had projected loss of 74 cents a share.
Revenue increased 20 per cent to $20.6 billion, short of the $20.84 billion projected by analysts. Amazon shares fell 11 per cent, to $278.89, in after-hours trading.
Ahead of the report, shares had lost 23 per cent year to date, hit by prior big losses.
According to Amazon, huge losses would continue in the fourth quarter, with the company projecting losses at a huge $570 million for the fourth quarter, and revenue of $27.3 billion to $30.3 billion.
Amazon in the third quarter launched a highly publicised smartphone, the Fire, which attempted to take on the iPhone, but proved to be a massive flop. The Fire was originally priced at $199 with a two-year contract, but it had been marked down to $1.
The company, however, has a new line of Kindle tablets that had been better received, and it was now looking to make a bigger splash with consumers by opening pop-up stores in San Francisco and Sacramento.