Amazon.com Inc (Nasdaq: AMZN) reported better-than-anticipated fiscal 2021 fourth-quarter earnings. However, revenues missed estimates. Notably, better expense management and robust performances of cloud computing and advertisement businesses enabled the company to report impressive quarterly results.
Furthermore, the e-commerce firm upwardly revised the price of annual Prime membership. This decision sparked a round of buying in the market, with the stock rallying 13.54% or $375.88 to close at $3,152.79.
The Seattle, Washington-based company reported fourth-quarter 2021 revenues of $137.41 billion, an increase of 9% from $125.56 billion in the similar period last year.
For the quarter ended December 31, 2021, the e-commerce giant recorded a net income of $14.323 billion, or $27.75 per share, compared with a net income of $7.222 billion, or $14.09 a share, on December 31, 2020.
Notably, fourth-quarter earnings include a pre-tax valuation gain of $11.80 billion realized from Amazon’s stake in Rivian Automotive Inc., which concluded an IPO (initial public offering) in November.
Excluding foreign currency translation adjustments and net change in unrealized gains (losses), among others, the 4Q 20022 adjusted earnings were $14.022 billion, or $5.80 per share, an increase from $8.071 billion in 4Q 2021.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of $3.57 per share on revenues of $137.60 billion for the reported quarter.
Segment-wise,
- Net product sales increased 0.50% y-o-y to $71.416 billion.
- Net service sales were $65.996 billion, up 21.10% from last year.
Furthermore,
- North American sales grew 9% y-o-y to $82.36 billion.
- International sales were $37.27 billion, down 1% on a y-o-y basis.
- Amazon Web Services (division of Amazon’s cloud service) revenues surged 40% y-o-y to $17.78 billion and surpassed the revenues of $17.37 billion anticipated by StreetAccount.
Looking forward, Amazon anticipates 1Q 2022 sales in the range of between $112 billion and $117 billion, translating to a growth of 3% and 8%. Analysts currently anticipate revenues of $120.11 billion.
Interestingly, along with the release of fourth-quarter results, Amazon also announced an upward revision to the price of its annual Prime membership to $139, from $119, reflecting a 17% rise. The previous price hike happened in 2018 when the price was revised to $119, from $99. Likewise, in 2014 the price was revised from $79 to $99.
Furthermore, Amazon also lifted the monthly price of a Prime membership to $14.99, from $12.99. New members will come under revised billing rates on February 18, while prevailing members will face a revision in billing after March 25.
The quarterly earnings beat and upward revision of prices for Prime membership are expected to keep the stock of Amazon slightly bullish in the short term.
The historical price chart indicates that the stock of Amazon is rising after testing the support at 2,700. The next major resistance is anticipated only near 3,400. Additionally, the stochastics indicator is near the oversold region. Therefore, we can anticipate the stock to remain in an uptrend in the short term. It is advisable to open a position after the stock closes above its 50-day moving average.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
