Amazon surges 11% in after-hours; after up-beat 4rth quarter earnings

Amazon.com (AMZN) climbed as much as 11% in afterhours after reporting fourth quarter results on Thursday that shattered the analysts’ expectations.  Company’s profits rebounded during the quarter, while revenue climbed 21% year over year. The outperforming results show Amazon’s big investments in one-day delivery are paying off.

 

Amazon’s market cap surged above $1 trillion after hours on the back of the powerhouse earnings report. It joined Apple, Alphabet and Microsoft that have all crossed the trillion-dollar threshold.

The online retailer company, posted earnings per share: $6.47 per share vs. the expectations of $4.03 per share, according to analysts surveyed by Refinitiv. Amazon posted revenue of $87.44 billion vs. the expectations of $86.02 billion, as per Refinitiv. From Amazon Web Services, it posted revenue of $9.95 billion vs. expectations of $9.81 billion, according to FactSet.

 

AMZN’s revenue grew 21 percent to $87.44 billion for the quarter that also indicates the company’s investments in speedier shipping are converting to more purchases. Amazon claimed customers shopped at record levels in last quarter,  during the holiday season and also said that it quadrupled both one-day and same-day deliveries over the period.

 

For first quarter, Amazon issued the upbeat guidance, by saying that it now expects to report the revenue between $69 billion and $73 billion. Amazon CFO Brian Olsavsky also told that it doesn’t have any visibility on whether the coronavirus will impact its first quarter results.

 

Many U.S companies have also warned the deadly virus could weigh on their business while others big names such as Google have also limited the operations in China, where the majority of cases have been reported.

Amazon CEO Jeff Bezos said in the earnings release, “more people joined Prime this quarter than ever before” and that the company now counts more than 150 million paid Prime members around the world. Amazon last gave an update on Prime subscribers in April 2018, saying it had more than 100 million members in the program.

AmazonFactSetData
AmazonFactSetData

 

As expected, Amazon’s worldwide shipping costs increased significantly during the quarter, climbing 43% year over year to $12.9 billion. The company said in its last earnings report in October that it would spend $1.5 billion during the holiday shopping season to expand one-day and same-day delivery.

Olsavsky said on the earnings call, the costs associated with rolling out the program came in slightly under $1.5 billion during the 4rth quarter. Amazon will also spend $1 billion more on the initiative in first quarter and again in the second quarter, we’ll start to lap this,”

Olsavsky also added that he expects the costs to become more efficient as delivery volume grows alongside new transportation modes, such as additional routes and zip codes.

 

Despite Amazon’s growing investments, the company’s net income rebounded during the quarter. Its net income grew 8% year over year to $3.27 billion, which topped analysts’ expectations of $2 billion. Amazon’s net income slid 26% during the third quarter as a result of costs tied to ramping up one-day delivery.

AmazonReport
AmazonReport