Amazon share price: take off on advertising and web services?
Amazon (NASDAQ:AMZN) stock price rose 13.5% to $3,153 after strong earnings last week sent a wave of relief to tech investors after recent shocks from Facebook and Netflix . In fourth-quarter results, sales rose 10% year-on-year to $137.4 billion, driven by growth in Amazon Web Services (AWS) and advertising. And although e-commerce sales were down slightly, it was not surprising as the sales figures were compared to the pandemic boom of 2020.
And overall, quarterly profit nearly doubled year-over-year to $14.3 billion, thanks to its investment in electric vehicle startup Rivian, as well as its best weekend ever. -end of Black Friday. And for the year, sales rose 33% to $469.8 billion, pushing profits up to $33.4 billion.
And Amazon has grown 281% over the past five years. But it’s worth noting that Amazon’s stock price has been above its current level for much of the pandemic. And even after last week’s results, it’s still below the $3,334 price it commanded at the start of the year.
And with the US Federal Reserve set to raise interest rates up to seven times this year, Amazon’s growth could be hurt by the rising cost of debt. But the tightening of monetary policy may also work in his favor, allowing him to acquire decent proposals such as Peloton at bargain prices.
Amazon stock price: preferential increase
Amazon is not immune to the staggering 7% inflation rate in the United States. CEO Andy Jassy acknowledged the pressure, saying “as expected over the holidays, we saw higher costs driven by labor shortages and inflationary pressures.” And “these issues persisted into the first quarter due to Omicron,” with sales growth of 3% to 8% forecast for the current quarter. However, Jassy remains “optimistic and excited” about the future, despite these pressures increasing costs by $4 billion in the quarter.
This could be because Amazon is raising the price of its Prime subscription for US customers, with its monthly fee expected to drop from $12.99 to $14.99, while annual customers will pay $139, up from $119. It’s the “first time Amazon has raised the price of Prime since 2018”, and it was justified by “continued expansion of Prime member benefits as well as rising wages and transportation costs”.
CFO Brian Olsaysky admits continued cost-of-living compression could see some customers unsubscribe from the service, but argues that was not the case in 2018. And since then Amazon has tripled the number of Prime Video Originals and increased items. available for free shipping over 50%. And from September, it will feature an original Lord of the Rings show and become the “exclusive home” of Thursday Night Football, under a “historic 11-year agreement with the National Football League (NFL”).