Amazon Surpasses Profit Growth Expectations In Fourth Quarter
There had previously been worry that Amazon would not experience such a strong showing in profits because of increased costs associated with their one-day shipping service. There are currently 150 million Amazon Prime members. However, some increased costs with shipping were offset by profits made by Amazon Web Services which sells cloud services.
The strong results in the fourth quarter have pleased investors with Amazon’s market value increasing by close to $100 billion. At this rate, Amazon could exceed $1 trillion in market value.
More specifically, profit for the last quarter jumped 8% to $3.3 billion. The original estimate was achieving profits between $1.2 billion and $2.9 billion.
“There was investor concern that one-day shipping would be a drag to margins, so the fact that they have been able to offer one-day shipping and also at the same time drive some efficiency has to please investors,” Raymond James analyst Aaron Kessler said.
Shipping costs have been rising and are expected to continue doing so. Shipping costs are now $12.88 billion, which is a 43% increase from last year.