Expected to lead technology stocks to launch a counterattack Amazon Q4 earnings report rose more than 13% after hours than expected

After the local time on Thursday, e-commerce giant Amazon announced its 2021 Q4 quarterly financial report, which is expected to lead technology stocks to launch a round of rebound driven by strong holiday season sales, AWS business profits and Prime membership price increases. As of press time, Amazon is up 13.99% after hours.

According to the earnings report, Amazon's net sales in the fourth quarter were $137.4 billion, up 9% year-on-year, and analysts expected $137.82 billion; fourth-quarter operating profit was $3.5 billion, up 98% year-on-year, estimated at $2.43 billion; and net profit was $14.3 billion, equivalent to earnings per share of $27.75, an estimated $3.77.

The first thing to explain is that the main reason for Amazon's profit surge in the fourth quarter is that it took into account the pre-tax surplus of $11.8 billion for investment in Rivian, and electric vehicle concept stocks landed on the U.S. stock market in November last year.

Amazon warned investors before the holiday season began last October that the company could need to significantly increase related spending, including logistics costs, hiring bonuses and overtime, due to supply chain strains and labor shortages. According to the financial report, Amazon's performance expenses in the fourth quarter reached $22.4 billion, an increase of nearly $4 billion over the same period last year, which is basically in line with market expectations.

CEO Andy Jassy said that as expected in the fourth quarter, we are seeing higher costs due to labor supply shortages and inflationary pressures, which are continuing into the first quarter of this year due to the Opichron outbreak. Despite these short-term challenges, the company continues to feel optimistic and excited about our business as we emerge from the pandemic.

According to the financial report, Amazon's highest-margin cloud service AWS achieved revenue of $17.78 billion in the fourth quarter, a further increase in growth to 40%, and an operating profit of $5.29 billion also exceeded expectations. Advertising revenue, which was first disclosed separately, reached US$9.716 billion, up 30% year-on-year. Counting third-party seller services, subscription services and other businesses, more than half of the company's revenue has come from non-self-operated retail business channels.

The Prime membership fee increase, which was widely expected by the market before the earnings report, also landed as scheduled, and this round will rise by $20 to $139, which is also the first price adjustment in nearly four years. Prime members offer a range of services such as fast shipping, shopping discounts, streaming, and the market generally expects price increases to help companies cope with rising cost pressures.

Amazon also expects the company's revenue in the first quarter of this year to be about $112 billion to 117 billion, and operating profit is close to $6 billion, which is roughly in line with the average analyst expectation.

(Source: Financial Associated Press)