Shares in Amazon soared after the ecommerce giant posted a massive rise in earnings in its fourth quarterly report. This comes following a growth in revenues from its advertising business as well as investments in promising brands such as EV manufacturer Rivian.
The tech giant appeared to have had a fruitful time over the holiday season with gains of over $14.32 billion during the fourth quarter. This was an impressive 24% rise in sales compared to what had been a relatively flat third quarter of 2021. It’s also a sign that Amazon is making strong year-on-year growth with a 9% rise in sales compared to the same period in 2020.
All of which was enough to send the share price of Amazon soaring by as much as 19% in extended hours trading. Plus it showed how Amazon’s attempts at diversification have been largely fruitful.
While there was actually a decrease in online store sales compared to last year, the brand enjoyed remarkable gains in other areas such as cloud computing and advertising. In particular, Amazon Web Services saw sales of $17.8 billion which was a 40% year-on-year increase. Plus with a healthy income generated through the investment in the electric vehicle maker, Rivian, it seems that Amazon’s gamble is paying off.
Such impressive growth is a contrast to other tech brands like Facebook, PayPal and Netflix who are all struggling with flagging user numbers and a tough economic backdrop. Amazon has enjoyed two of its most profitable quarters ever in the past two years of the pandemic which is remarkable considering the supply chain problems that have caused everything from logistical issues to a rise in labor costs.
Anyone doubting Amazon’s success will be countered by facts such as one that revealed how the brand sold on average 11,500 products every minute between Black Friday and Christmas. However, Amazon still has some tough battles to fight throughout the whole of 2022.
The price paid for Amazon’s success is a rise in operating costs, and the ecommerce brand recently announced an increase in the Amazon Prime membership price. This will see a $20 price hike that will come into effect this month for new customers, although the price rise will be delayed until March for existing customers. Such price hikes have been justified by Amazon with the promise of several big titles appearing on Prime including the new Lord of the Rings TV series as well as the exclusive rights to Thursday Night Football in the NFL.
Plus there are ongoing concerns about what Amazon can do to counter the ongoing supply chain crisis. Amazon’s plans for expansion have also been hit by a fairly tight labor market, although the brand has raised wages in a bid to attract more employees. All of which sets the scene for a tough but manageable year for Amazon.
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