Amazon smashes all expectations in 4th quarter sending shares skyrocketing 13%

Amazon has smashed sales expectations across the board in its fourth quarter sending shares surging as much as 13 per cent and raising its market capitalisation back to over $1 trillion.

Over the holiday quarter Amazon saw revenues skyrocket 21 per cent to $87.44 billion (£66.57 billion), comfortably above analysts’ expectations of $86.02 billion (£65.49 billion).

Earnings per share also trounced expectations of $4.03 per share, coming in at $6.47 per share helping Amazon achieve its biggest share gain since 2017 and return to the ranks of so called ‘four comma’ companies like Microsoft, Apple and Alphabet which market valuations over $1 trillion (£761 billion).

This significant profit boost is largely due to Amazon’s major investment in one-day and same-day delivery, which quadrupled over the quarter.

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In October Amazon warned investors that it was due to pile $1.5 billion (£1.14 billion) into the initiative which could affect margins.

Despite worldwide shipping costs climbing 43 per cent to $12.9 billion (£9.82 billion) year-on-year, Amazon’s chief financial officer Brian Olsavsky said spending had come under expectations to around $1 billion (£760 million).

Not only was this investment paramount to driving Amazon’s healthy revenue increases, but its growing investments failed to dent its net income, which grew eight per cent year-on-year to $3.27 billion (£2.49 billion) once again coming well ahead of the $2 billion (£1.52 billion) expected.

According to its chief executive Jeff Bezos “more people joined Prime this quarter than ever before”, totalling more than 150 million paid subscribers globally, up from the 100 million reported in April 2018.

For the current quarter, Amazon said it expects revenues to come in between $69 billion (£52.53 billion) and $73 billion (£55.58 billion), and that it planned to invest a further $1 billion (£760 million) into improving delivery times.

Meanwhile its cloud computing arm also performed above expectations, reporting revenues rise of 34 per cent year-on-year to $9.95 billion (£7.58 billion).

Its subscription services, including Amazon Prime Video and Music Unlimited, also saw revenues rise 34 per cent year-on-year to $5.24 billion (£3.99 billion).

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