The booming economy and the persistent virus have begun to plague Amazon’s retail business, even as its cloud computing business has grown and investment profits have risen.
The company, whose profits, number of employees and share prices rose two years ago because of covid forced people to stay home, said on Thursday that its operating income rose to $ 3.5 billion in the fourth quarter, from તેણે 6.9 billion in the fourth quarter. Is more than half. Of 2020.
To offset its increased costs, Amazon said it was raising the annual cost of its Prime Shipping Club from $ 119 to $ 139. The 17 percent increase is the first major increase since 2018, the company said.
Andy JC, Amazon’s chief executive, said in a statement: “As expected for the holidays, we saw higher costs due to labor supply shortages and inflationary pressures, and these issues remained unchanged in the first quarter due to Omicron.”
However, Amazon’s investment in Reven Automotive, which was announced in the fourth quarter, called Amazon a “pretex valuation gain,” which led to a sharp increase in net income. Amazon owns about 20 percent of electric vehicle manufacturers.
That pushed net income to $ 14.3 billion, compared to $ 7.2 billion a year ago. Without the revision, net revenue would have been 2.5 billion, the company said. Revenue rose slightly lower than analysts had expected, reaching a record 137.4 billion.
Amazon controls about 40 percent of the e-commerce market but the business – with which it started and is still well known – is the weakest part of the company. Online retail sales were essentially flat in the fourth quarter from 2020.
“Growth is slowing, no doubt,” said Tom Johnson, global chief digital officer at Mindshare Worldwide, in a note. “Comparison against the Hyper Growth Quarter since the onset of the epidemic, supply chain issues that affect advertising costs, and the continuation of additional costs leads to the conclusion that the rapid period of growth is over.”
AWS, Amazon’s cloud division, increased its operating income by 49 percent, boosting its overall impressive performance. Advertising revenue rose 37 percent to $ 9 billion. Twitter, which makes up most of its revenue from advertising, has annual sales of less than 5 billion.
During regular trading on Thursday, Amazon shares fell 8 percent as investors worried about what was to come. But after the earnings release, investors focused on the good news, pushing Amazon shares up nearly 17 percent in after-hours trading before starting to fall sharply.
Andrew Lipsman, chief analyst at Insider Intelligence Research Firm, attributes two things to Wall Street optimization.
“The price for Prime membership increased and AWS had a steady acceleration in growth and its growing impact on the bottom line,” he said. “Perhaps there are some excuses for the e-commerce downturn, given Q4 2020’s unusually challenging year-over-year comparisons.”
Amazon added 140,000 workers during the quarter, giving it a total of 1.6 million employees. Which increased by 24 per cent in one year. Walmart, the largest non-governmental US employer, has 2.2 million workers.