Amazon announced that Prime members will increase prices, and in the fourth quarter, they will make a lot of money on electric vehicles

Unlike Meta, whose stock price plunged by more than $200 billion after its earnings report, Amazon's stock price rose after the announcement of its new quarterly earnings.

On February 4, Amazon announced its financial results for the fourth quarter ended December 31, 2021. According to the earnings report, Amazon's net sales rose 9.4% to $137.4 billion in the fourth quarter of 2021, compared to $125.6 billion in the fourth quarter of 2020.

In terms of net profit, Amazon's net profit in the fourth quarter was $14.3 billion, an increase of 98.3% from $7.2 billion in the same period last year, and a rapid increase compared with the 50.2% year-on-year decline in net profit in the third quarter. Much of the net profit growth stemmed from amazon's investment in electric vehicle maker Rivian. Amazon said net income for the fourth quarter included $11.8 billion in pretax valuation gains, including non-operating income from investments in Rivian's common stock, which completed its initial public offering in November 2021.

Among them, product sales were $71.42 billion, an increase of 0.5% year-on-year, and service sales were $66.00 billion, an increase of 21% year-on-year.

For the full year of 2021, Amazon's net sales rose 22% to $469.8 billion and net profit was $33.36 billion, up 56.4% from $21.33 billion in 2020.

In response, Amazon CEO Andy Jassy said, "We saw labor supply shortages and inflationary pressures lead to higher costs, and due to Omicron, these problems continued into the first quarter." Despite these short-term challenges, we continue to be optimistic about the business as we emerge from the pandemic. ”

Foreign analysts believe that Amazon's stock price rose after the earnings report was released because the sales of its cloud computing business exceeded Wall Street's expectations, and the company raised the price of Prime membership subscriptions, alleviating some concerns about the impact of cost increases on profitability.

In terms of segmentation, Amazon's e-commerce net sales in North America were $82.36 billion, an increase of 9% year-on-year; e-commerce net sales in the global region were $37.27 billion, down 1% year-on-year; AWS's fourth-quarter net sales were $17.78 billion, up 40% year-on-year. Amazon said more than 130,000 third-party sellers worldwide sold more than $100,000 on Amazon during the Black Friday and Christmas periods, and during Black Friday and Christmas, third-party sellers in the United States sold an average of 11,500 products per minute.

IN THE FOURTH QUARTER, AWS SALES ACCOUNTED FOR 12.9% OF THE COMPANY'S SALES, AND ALTHOUGH SALES WERE NOT HIGH, AWS'S OPERATING PROFIT SUPPORTED TOTAL OPERATING REVENUE. AWS's operating profit for the fourth quarter was $5.29 billion, while the global regional e-commerce business operating loss was $1.63 billion, and the North American region's e-commerce operations lost $210 million, while Amazon's total operating income for the quarter was $3.46 billion.

From the trend point of view, this means that the core position of Amazon's e-commerce business is being challenged by the service business. Amazon has long been known for selling all kinds of goods, but services sales have been growing at a faster rate for years. Growth was 21 percent in the quarter and 42.4 percent and 29 percent in the previous two quarters, while product sales grew slightly for several consecutive quarters, with a negligible increase of 0.5 percent in the fourth quarter. Service sales include commissions and fees charged from third-party sellers, sales related to their cloud computing platform Amazon Web Services, subscriptions to digital content, advertising fees, and more.

Amazon also announced that the price of Prime membership will rise. Over the past few years, Amazon has ramped up the services included in Prime membership, including Prime shipping, more offers and discounts, and more high-quality digital entertainment, including TV, movies, music, and books. Amazon said in its earnings report that with the continuous expansion of Prime membership benefits and the rise in wages and transportation costs, Amazon will increase the price of US Prime members, from $12.99 to $14.99, and the annual fee from $119 to $139, up 17% year-on-year.

Amazon also faces stiff regulatory backlash, with the Federal Trade Commission investigating the company's alleged use of third-party seller data to sell its own Amazon-based branded products. In addition, the FTC is also reviewing Amazon's plan to buy Hollywood studio MGM for $8.45 billion, which Amazon originally planned to strengthen its video products and better compete with companies such as Netflix and Disney+.

Amazon said in its earnings report that it expects net sales in the first quarter of 2022 to be between $112 billion and $117 billion, an increase of 3% to 8% year-on-year.