U.S. e-commerce companies Amazon records an earning surprise, following Apple and Tesla. Amazon’s net earnings per share and its fourth-quarter operating performance reached $6.47 and $3.3 billion. Respectively, it is far exceeding its earlier market estimate.
Sales also rose in the fourth quarter to $87.4 billion thanks to brisk sales during the holiday season. Up 21 percent from a year earlier.
Shares rose 12 percent to $2088 in the afternoon trading Thursday. Increasing the company’s market capitalization by 100 billion dollars. This makes Amazon the fourth U.S. company to surpass $1 trillion in market capitalization after Apple, Microsoft and Google.
How Amazon manages to reach the earning surprise
Along with strong sales during the holiday season, improved profits from cloud services and advertising businesses have led to a surprise performance. Investing heavily in the delivery sector through rapid delivery also helped increase the number of “prime members” to 150 million, driving up sales.
Amazon has focused on increasing the volume of deliveries under the slogan “One Day Delivery”. The strategy of significantly reducing the time it takes to deliver by building a logistics warehouse close to consumer residences was mainly effective. For holiday season sales, sales rose 4.1 percent year-on-year. And especially online sales rose 14.6 percent, marking the highest level of sales ever.
In the advertising business, sales also rose 41 percent on-year to $4.8 billion. The advertising business sector is expected to become a new revenue generator for Amazon in the future.
On the other hand, Amazon Web Services (AWS) showed an average growth rate of 40 percent in the quarter. But only a 34 percent increase this time, slowing growth. In the international business sector, it records operating losses. With operating profits falling 15.6 percent in North America.
Amazon is targeting sales of $69 billion to $73 billion in the first quarter of this year. Also it is closely watching the situation of new coronavirus infections. Amazon does not run a direct business in Wuhan, China, but a number of vendors are Chinese.
