Amazon doubles profits and raises Prime prices in the US

(In the fourth paragraph, last sentence, insert the missing word million: there are more than 200 million subscribers worldwide.)

Palo Alto/Bangalore (Reuters) – A doubling of quarterly profit and higher prices for prime service in the US boosted shares of internet giant Amazon.

The shares rose up to 17 percent in after-hours trading. In Frankfurt trading, the shares rose by twelve percent on Friday morning.

The participation in the electric car manufacturer Rivian paid off for Amazon: In the fourth quarter, net profit rose to $ 14.3 billion from $ 7.2 billion in the previous year, as the world’s largest online retailer announced on Thursday evening. This includes a pre-tax profit of $11.8 billion from the stake in Rivian – the electric car maker went public in November. Sales rose 9 percent to $137.4 billion. Costs caused, among other things, business interruptions due to the rapid spread of the Corona Omicron variant, bonus payments to attract staff in a tight labor market, and higher transport costs.

PRIME IS GOING MORE EXPENSIVE IN THE US

The announcement by the Internet giant that it wanted to collect more money for its Prime membership in the USA also caused even more euphoria on the stock exchanges. Amazon wants to use this to compensate for higher freight and labor costs. Monthly charges for Prime service in the US will rise to $14.99 from $12.99 previously. The annual fee will be raised to $139 from $119. In the US, the price for Prime was last increased from $99 four years ago. Amazon CFO Brian Olsavsky said in a conference call that he expects some Prime users to quit, but that in the past this has been limited. Revenue per Prime member has increased significantly during the pandemic.

Analysts had expected a price increase. “It’s about time,” said expert Michael Pachter from Wedbush Securities before the publication of the quarterly figures, referring to the higher transport costs. In the US, a majority of households use Prime, and there are more than 200 million subscribers worldwide.

CORONA PROBLEMS CONTINUE

Operational disruptions, lower productivity and inflationary pressures cost more than $4 billion, according to CFO Olsavsky. Labor-related charges will also exist in the current quarter, but to a slightly lesser extent. Amazon expects net sales of between $112 and $117 billion in the first quarter, which corresponds to an increase of three to eight percent. However, the market had expected even more at $120 billion.

The cloud service of the Internet giant Amazon Web Services (AWS) recorded a jump in sales of 40 percent to 17.8 billion dollars in the past quarter due to the trend towards working from home and online games. Analysts polled by Refinitiv had expected $17.3 billion.