This is Why Amazon Shares Are Soaring This Morning

Monday, 30 Jul, 2018

Earnings per share reached $5.07, doubling Thomson Reuters estimates of $2.50 per share and generating a record $2.5 billion in net income for the quarter.

Amazon topped $2 billion in quarterly profit for the first time in its history, an impressive run fueled by continued growth in Prime subscriptions, cloud computing and its nascent advertising business.

According to the research firm eMarketer, Amazon's e-commerce revenue will grow more than 28 per cent this year to reach US$394 billion, and will account for 49 per cent of United States online retail sales and almost five percent of all retail spending.

Amazon (AMZN) reported better-than-expected earnings on Thursday afternoon, a day after Facebook's (FB) lackluster second-quarter earnings report led to a historic sell-off.

Despite the increased competition from Microsoft and Google, Amazon's cloud service re-accelerated its sales growth to 49 percent year-over-year, generating $6.1 billion in sales.

While the company's fulfilment costs surged almost 54% in the quarter, all of its other costs - fulfillment, marketing, technology, administrative - grew much slower than its sales. But it's not the same story for Amazon.

Amazon CEO Jeff Bezos highlighted the growth of Amazon's voice-assistant Alexa, saying "tens of thousands" of developers use the service.

Snapshot: On Thursday, Shares of Amazon.com, Inc., (NASDAQ: AMZN), performed -2.98 percent and closed at $1808 in the last trading session. The shares were sold at an average price of $1,587.50, for a total transaction of $3,219,450.00. The famously frugal company has spent much of this year trying to keep a lid on costs, and extract efficiency gains from investments in personnel and facilities, Amazon Chief Financial Officer Brian Olsavsky said on a call with reporters.

Amazon's spending typically climbs in the summer quarter, pressuring profits as the company prepares for Christmas and the winter holidays, its peak sales period each year.

At least 16 brokerages raised the price target on the stock with several saying that the high levels of profitability may be a new normal for the company.

Finally, Swiss National Bank grew its position in Amazon.com by 0.6% in the fourth quarter.

But Amazon's results were more than just a product of a stronger dollar.

Amazon uses that fee to help pay for the growing cost of shipping packages, as well as the cost of building out members-only digital offerings like original films, television shows and streaming music. But as online sales grew, so did shipping costs: Amazon spent almost $6 billion mailing out packages in the second quarter, a 31 percent increase from a year ago. This is the second-straight quarter of surpassing $2 billion in advertising revenue.

The company's sales grew an impressive 39% to $US52.9 billion, but they fell shy of Wall Street's expectations.

A number of hedge funds and other institutional investors have recently bought and sold shares of the business. Analysts expect Amazon to post earnings of $2.50 per share, up from 40 cents a year ago, even as the company continues investing heavily in fulfillment centers, new stores, and pricey content deals.