Amazon Shares Soar After Robust Earnings Report

Amazon.com Inc Thursday posted holiday quarter results well above expectations as the expansion of its one-day shipping program came under budget and membership in its Prime loyalty club notched a 50% rise in two years.

Reuters reports shares soared as much as 13% in after-hours trade, putting the online retailer back in the $1 trillion market capitalization club. If the share gain holds on Friday, it will be the biggest daily jump for Amazon since October 2017.

Amazon also forecast operating income of up to $4.2 billion in the current quarter, down from $4.4 billion the year prior. Still, that appeared to assuage investor concerns about Amazon’s continued spending on fast delivery, which could have erased windfalls from e-commerce, advertising and cloud computing sales.

Amazon Chief Financial Officer Brian Olsavsky told reporters that additional investment in one-day shipping came slightly under the $1.5 billion the company had forecast for the fourth quarter, despite more customer orders. Extra costs in the current period will be about $1 billion for the delivery effort, he said.

Olsavsky added that spending on video would rise going forward, but the company was still determining its overall level of investment for 2020.

Jeff Bezos, Amazon’s chief executive, said in a statement that the world’s biggest online retailer now has more than 150 million paid members in its loyalty club Prime, a 50% increase from its last disclosure in April 2018.

Subscribers keep returning to Amazon to benefit from perks like fast delivery, television and music streaming. Its suite of voice-controlled Echo speakers has prompted still more engagement from customers, and grocery orders more than doubled in the holiday quarter in a vote of confidence for Amazon’s 2017 bet to buy Whole Foods Market.

Revenue from subscription fees grew 32% to $5.2 billion for the quarter ended Dec. 31, Amazon said, as more shoppers signed up for Prime than in any period prior.