Amazon’s Q4 rose more than 13 percent after earnings beat expectations

2022-06-05 0 By

Amazon is poised to lead a rally in tech stocks as the e-commerce giant reports earnings for Q4 2021 after the close of trading on Thursday, driven by strong holiday sales, higher profits from its AWS business and a price hike for Prime members.Amazon rose 13.99% in after-hours trading as of press time.Amazon reported net sales of $137.4 billion in the fourth quarter, up 9% from a year earlier. Analysts expected $137.82 billion.Operating profit for the fourth quarter was $3.5 billion, up 98% from a year earlier and estimated at $2.43 billion.Net income was $14.3 billion, or $27.75 a share versus an estimate of $3.77.To be clear, Amazon’s fourth-quarter profit surge was largely due to an $11.8 billion pre-tax gain from its investment in Rivian, an electric vehicle concept that hit the U.S. market in November.Amazon warned investors before the holiday season began in October that it would need to significantly increase expenses, including logistics, hiring bonuses and overtime, because of supply chain strains and labor shortages.Amazon’s fourth-quarter compliance expenses reached $22.4 billion, up nearly $4 billion from the same period last year and roughly in line with market expectations, according to its earnings report.”As expected in the fourth quarter, we are seeing increased costs due to labor shortages and inflationary pressures,” said CEO Andy Jassy. “These issues are continuing into the first quarter of this year due to the Omicron outbreak.”Despite such short-term challenges, the company continues to be optimistic and excited about the business as we emerge from the pandemic.AWS, amazon’s most profitable cloud service, posted revenue of $17.78 billion in the fourth quarter, up 40%, and operating profit of $5.29 billion beat expectations, according to the results.Advertising revenue, separately disclosed for the first time, reached $9.716 billion, up 30% from a year earlier.More than half of the company’s revenue comes from non-self-owned retail channels, including third-party seller services and subscription services.An increase in Prime membership fees, widely expected before the earnings report, also took effect, rising $20 to $139, the first increase in nearly four years.Prime members offer a range of services from fast shipping to shopping discounts to streaming, and the price increases are widely expected to help the company cope with rising costs.Amazon also forecast first-quarter revenue of about $112 billion to $117 billion and operating profit of nearly $6 billion, roughly in line with the average analyst estimate.(Credit: Financial Union)