Amazon Q4 Earnings Takeaways: Holiday Costs, Prime Price Hike, Stock Soars

Amazon.com Inc AMZN shares popped more than 15% after reporting fourth quarter and fiscal year financial results after market close Thursday. Here are the key takeaways for investors.

What Happened: Amazon reported fourth-quarter net sales of $137.4 billion, up 9% year over year. The sales figure came in shy of the consensus estimate of $137.6 billion, according to Benzinga Pro.

Amazon reported fourth-quarter earnings of $27.75 per share.

For the full fiscal year, Amazon reported net sales of $469.8 billion, up 22% year-over-year. Full-year earnings per share were $64.83.

Amazon Web Services was recognized as a $71-billion segment based on its fourth-quarter annual run rate. The unit had year-over-year growth of 40% in the quarter.

Several items were cited as setbacks in the fourth quarter.

“As expected over the holidays we saw higher costs driven by labor supply shortages and inflationary pressures and these issues persisted into the first quarter due to Omicron,” said Amazon CEO Andy Jassy.

The company is investing heavily in the Amazon Prime segment. More items are being added with exclusive deals and discounts and more entertainment options are coming.

“Since 2018, Prime Video has tripled the number of Amazon Originals, rolling out new series and movies,” the company said.  Viewership for Prime Video hit a record for its sports thanks to strong viewership of “Thursday Night Football” games.

Amazon announced it had the largest ever Black Friday to Cyber Monday holiday shopping weekend in company history.

Amazon Web Services saw several new customer wins in the quarter including a deal with Nasdaq Inc NDAQ in a plan to become the first fully enabled, cloud-based exchange. Meta Platforms FB selected AWS as the provider of artificial intelligence research and development.

Related Link: What To Watch On Amazon's Chart After The Stock Reacts To Q4 Earnings 

What’s Next: Amazon will raise the cost of its Amazon Prime membership, citing the expansion of benefits to members and a rise in wages and transportation costs. Prime will rise in price from $12.99 to $14.99 for a monthly subscription and the annual membership will increase from $119 to $139.

This marks the first price increase for Amazon Prime since 2018 and also follows a planned price increase by Prime Video rival Netflix Inc NFLX. 

The new prices will go into effect for new members on Feb. 18, 2022, and for existing customers after March 25 at the date of their next renewal.

Amazon customers will be able to use Venmo, a service owned by PayPal Holdings PYPL, to pay for their items on Amazon’s online store by linking to their bank account or Venmo balance.

Amazon sees first quarter 2022 net sales hitting a range of $112 billion to $117 billion, representing year-over-year growth of 3% to 8%. The analyst estimate for the first quarter is $120.1 billion.

AMZN Price Action: Shares are up 18% to $3,271.46 at the time of writing in after-hours trading Thursday.