Amazon said Thursday its revenue rose 9% in the fourth quarter and the company announced a gain of nearly $12 billion from its investment in electric vehicle company Rivian.
Amazon shares jumped as much as 17% in extended trading. If the stock were to sustain this rally on Friday, it would be the biggest one-day gain since 2009.
Here are the key numbers:
- Earnings per share: $27.75
- Income: $137.4 billion vs $137.6 billion expected, according to Refinitiv analyst survey
- AWS Revenue: $17.8 billion vs $17.37 billion expected, according to StreetAccount
Amazon reported first-quarter revenue of between $112 billion and $117 billion, below the average estimate of $120 billion, according to Refinitiv. Operating profit in the fourth quarter will be between $3 billion and $6 billion.
Fourth-quarter sales rose 9.4% to $137.4 billion. It’s Amazon’s first period of single-digit growth since 2017.
Even with weaker-than-expected revenue and disappointing forecasts, Amazon has sufficiently convinced investors that growth will resume. The market had a very different reaction to Facebook’s results on Wednesday, sending the social media company’s shares to their worst fall after its earnings and guidance missed estimates.
Amazon has unveiled revenue for its fast-growing advertising business for the first time. Advertising services grew 32% year over year to $9.7 billion in the quarter. Previously, Amazon included advertising revenue in its “other” business segment.
“It was the majority of other revenue,” Amazon chief financial officer Brian Olsavsky said in a call with reporters. “We are very pleased with the growth in ads. It continues to drive value.”
While advertising has always been seen as a tangential business for Amazon, the company has been so successful in attracting advertising dollars that it is now third in the US market, behind Google and Facebook. Google posted ad revenue of $61.2 billion in the fourth quarter, while Facebook had ad sales of $32.6 billion during the period.
Amazon’s big gain on Rivian came as a result of the electric vehicle maker’s IPO in November. The deal, priced at $78 per share, values the company at $66.5 billion. The stock topped $172 at its peak, but has since fallen back to around $60. Rivian shares gained 3% in extended trading on Thursday.
Amazon, which has invested more than $1.3 billion in Rivian, owned 22.4% of the company’s Class A shares before the IPO.
Amazon is the latest of the mega-cap tech companies to report on what has been a rollercoaster earnings season. Netflix kicked off in disastrous fashion, with a miss on subscriber estimates. Microsoft, Apple and Alphabet followed by cross-referencing past estimates, all ahead of troubling numbers from Facebook.
Amazon CEO Andy Jassy, who took over from Jeff Bezos last year, said the pandemic continues to pose challenges. Faced with a tight labor market, Amazon last year raised wages to an average of $18 an hour to attract workers and increased incentives, offering signing bonuses of up to $3,000 in some markets. .
“As expected over the holidays, we saw increased costs due to labor shortages and inflationary pressures, and these issues continued into the first quarter due to Omicron,” Jassy said in the release. . “Despite these short-term challenges, we remain optimistic and excited about the business as we emerge from the pandemic.”
Amazon also raised the price of its Prime membership for the first time in four years. The company said it will increase the price of its annual Prime membership to $139 from $119. The Prime monthly subscription cost will also drop from $12.99 to $14.99. The price change will take effect for new members on February 18 and for current members after March 25.
The company’s cloud computing business was a notable bright spot. Amazon Web Services revenue soared nearly 40% to $17.78 billion, beating analyst estimates.
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