Shares rose 12 per cent in after-hours trade
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A worker assembles a box for delivery at the Amazon fulfillment center in Baltimore, Maryland. Photo by REUTERS/Clodagh Kilcoyne/File Photo Amazon.com Inc on Thursday said it was raising the price of its Prime subscriptions, as it looks to offset higher shipping costs and wages even after beating profit expectations for the holiday quarter.
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Shares rose 12 per cent in after-hours trade. Before the market’s close, Amazon’s stock had dropped nearly eight per cent as part of a broader technology share sell-off sparked by Facebook owner Meta Platforms Inc’s outlook.
Amazon’s profits included a pre-tax gain of US$11.8 billion from its stake in electric car maker Rivian Automotive.
On the heels of its windfall from at-home shopping in the pandemic, Amazon has poured money into its operations to manage disruptions, most recently the Omicron variant of COVID-19. It has marketed signing bonuses to attract hundreds of thousands of workers in a tight labor market, and it has paid more for shipping because it could not get products into the right warehouses.
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U.S. subscribers’ annual fees last went up four years ago to US$119 from US$99, and they went up four years prior from US$79. Analysts have said it was time And it has more than 200 million paid subscribers to its loyalty club Prime to whom to appeal for an increase to cover the company’s increased costs.
More On This Topic David Rosenberg: The outlook for Canada’s provinces? Head for the coasts Emerging ESG bond boom puts world on path to sell US$1.8 trillion Volatility rages in uranium stocks as clean tech takes a beating The U.S. monthly fee will increase to US$14.99 from US$12.99, and the annual membership to US$139 from US$119, effective Feb. 18 for new members, it said.
With more than 200 million members globally, Prime is an incentive to consumers to direct more of their shopping to Amazon so they can make the most of their subscriptions. Such fees for the fourth quarter alone grew 15 per cent to US$8.1 billion.
Still, Amazon forecast first-quarter sales below Wall Street estimates, projecting between US$112 billion and US$117 billion, or to grow between three per cent and eight per cent.
Analysts were expecting US$120.04 billion, according to IBES data from Refinitiv.
Net income for the holiday quarter, the busiest time of the year for Amazon, rose to US$14.32 billion, or US$27.75 per share, from US$7.22 billion, or US$14.09 per share, a year earlier.
© Thomson Reuters 2021
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