Shares of US giant Amazon (AMZN.US) are up more than 11% ahead of the market open in the face of the company's excellent Q4 2021 report. Yesterday, AMZN.US shares failed to resist the avalanche of sell-off in the NASDAQ index, losing almost 8% at the close. Amazon is an American multinational technology company with a reputation as one of the most valuable brands in the world.
The company announced an increase in its annual 'Prime' subscription from $119 to $139 within the US; the price of a monthly subscription will also increase from $12.99 from $14.99. The company made both these announcements alongside its highly successful Q4 2021 financial results report. As reasons for the price change, the company cited min. The release of additional Prime Video content, free shipping day, and described the increase as compensation for the rising labour and transportation costs of its services. The increase can therefore be seen as a market response to the rising prices of almost all products in recent months.
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Create account Try a demo Download mobile app Download mobile appAmazon's workforce has doubled in the last two years. The company currently employs almost 1.6 million workers. The company also relayed that it has increased wages for employees.
The company's profits doubled in the fourth quarter to a staggering $14.3 billion, which exceeded Wall Street analysts' expectations. The jump in profit was primarily due to the successful IPO of Rivian Automotive RIVN.US, an electric car company that had a spectacular November 2021 debut; Amazon owns a significant stake in the company. Also evident in the company's report is a profit driver in the form of Amazon Web Services, which reported a nearly 49% increase in operating profit posting $5.3 billion in revenue. For AWS, it was a record quarter in history which was also conveyed by Brian Olsavsky, Amazon's CFO speaking to analysts. Amazon's workforce has doubled in the last two years. The company currently employs nearly 1.6 million workers and also conveyed that it has increased wages for employees. Amazon Web Services' total sales in Q4 2022 were up 9% from the previous quarter to $137.4 billion in profits, which was almost perfectly in line with Wall Street forecasts. However, Amazon's Q1 2022 net sales growth is forecast to be between 3% and 8%, which is a sharp decline from the almost 44% in Q1 2021.
Despite the euphoric market reaction, analysts note that Amazon may struggle in the coming quarters as it struggles to cope with rising costs of services provided against the backdrop of slowly passing pandemic restrictions, helped by rising vaccination rates. These factors could cause the e-commerce sector to see the decline we have seen recently with companies such as Spotify (SPOT.US) and Netflix (NFLX.US). Additionally, Rivian's valuation has fallen by almost 60% since its November highs.
Today's theoretical opening price is $3172. This is an interesting level as it was previously a key horizontal support.
Source: xStation 5
Source: Google Finance
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