Amazon Shares Soar After Company Posts a Big Earnings Beat for Q4

Powerhouse company Amazon saw its shares climbing higher after the company soared on a cloud revenue beat and a huge profit gain from its stake in Rivian.

The company reported fourth quarter financial results this week that revealed 40% growth rate for AWS and revenue moving up 9%. Amazon reported a gain of nearly $12 billion from its investment in electric vehicle company Rivian.

The company also disclosed revenue from its fast growing advertising business for the first time. Shares jumped as much as 14% in extended trading Thursday.

For the quarter, Amazon reported EPS adjusted of $5.80 vs $3.57 expected, according to a Refinitiv survey of analysts. Revenue at $137.4 billion vs $137.6 billion expected, according to a Refinitiv survey of analysts.

AWS revenue was $17.8 billion vs $17.37 billion expected, according to StreetAccount.

Looking ahead, the company guided for first quarter revenue of between $112 billion and $117 billion. This was below the average estimate of $120 billion, according to Refinitiv. Operating profit in the fourth quarter will be in the range of $3 billion to $6 billion.

Fourth-quarter sales grew 9.4% to $137.4 billion. This was the company’s first period of single-digit growth since 2017.

Amazon disclosed revenue from its fast growing advertising business for the first time with advertising services grew 32% year over year to $9.7 billion during the quarter. Previously, Amazon included advertising revenue in its “other” business segment.

“It had been the majority of other revenue,” Amazon CFO Brian Olsavsky said. “We’re very happy with ad growth. It continues to drive value.”

Amazon’s big profit gain on Rivian is the result of the electric vehicle company having its IPO in November. Earnings per share, including the Rivian gain, was $27.75 for the quarter.
Amazon CEO Andy Jassy, who succeeded Jeff Bezos last year, said the pandemic continues to pose challenges however.

“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” Jassy said.

“Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”
Amazon also raised the price of its Prime membership for the first time in four years. The company said it will raise the price of its annual Prime membership to $139 from $119.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.