Amazon reported fourth-quarter revenue in line with Wall Street expectations and announced a $20-a-year increase in Prime subscription prices, causing its stock to stage a big rally after hours.
Shares in the tech giant jumped as much as 18% in after-marketing trading on the earnings news, after they had declined markedly earlier in the day. They finished the regular trading session off 7% and have fallen 18% in 2022 to date. Many tech companies, notably Netflix, Spotify and Facebook parent Meta, have slumped badly in recent weeks.
Total revenue gained 9% over the prior-year quarter to hit $137.4 billion, coming within a whisker of analysts’ estimates.
Net income in the period hit $27.75 per diluted share, several times greater than consensus estimates of $3.58. The earnings figure, however, included a pre-tax valuation gain of $11.8 billion from an investment in Rivian Automotive. The electric vehicle maker had its IPO last November. Even when accounting for that one-time item, though, the bottom-line performance was a source of relief, even if it fell far short of the $14.09 of the comparable quarter in the Covid-boosted 2020.
Citing investments in faster delivery as well as video programming like NFL football and The Lord of the Rings, Amazon said Prime will now cost $139 a year. It is the first increase since 2018 and the third since the customer loyalty program began. The jump has been $20 each time. On a monthly basis, the subscription will rise to $15 from $13.
While Amazon is generally stingy with statistics on streaming viewership, its focus on sports prompted the company to report that fourth-quarter live sports viewership around the world was the strongest it has ever been. Thursday Night Football, streamed across Prime Video and Twitch, delivered its highest average minute audience since Amazon obtained the rights in 2017, though Amazon did not divulge the exact number. This fall, the company will take over the night on an exclusive basis after Fox had broadcast the games.
In the UK, the Manchester United vs. Arsenal soccer game last December 2 became the most-watched Premier League match ever on Prime Video, with an estimated viewership of more than 4 million.
Advertising, not only for live sports, but also on Twitch and free streaming outlet IMDb TV, is an increasing area of focus. For the first time, Amazon broke out its ad business as a separate financial category. Ads are approaching the $10 billion mark and have nearly doubled in just a year’s time. In the quarter, what the company calls “advertising services” revenue increased 33% to $9.7 billion. The global figure was not accompanied by any breakout of specific regions or territories.
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