Shocker: Amazon Q1 Earnings Nearly Double; Stocks Surge

In Industry News, What's New by Lauren Parker, Accessories Magazine

It’s no surprise that Amazon’s logo is a smile. Or maybe it’s a smirk…

The digital retail behemoth that has every other retailer running scared just posted insane first-quarter earnings, crushing estimates and boosting its stock toward record highs. Oh, and it’s raising its Prime fees.

Amazon reported that Q1 sales rose 43% to $51 billion (up from from $35.7 billion in Q1 2017), according to a press release. Q1 profit totaled $1.6 billion or $3.27 per diluted share, up from $724 million or $1.48 per diluted share last year. Operating income rose 92% to $1.9 billion up from $1 billion a year ago. For Q2, Amazon projects net sales to be between $51.0 billion and $54.0 billion, or to grow between 34% and 42% compared with Q2 2017.

Amazon stock jumped roughly 7% in after-hours trading.

In 2017, Amazon Global Selling sales grew by more than 50% worldwide, representing more than 25% of total third-party seller sales on Amazon.

Amazon gave Q2 revenue guidance in the range of $51.0 billion to $54.0 billion, in-line with street estimate of $52.2 billion, noted CNBC. Operating income is expected to fall between $1.1 billion and $1.9 billion, far-exceeding the $1.01 billion street estimate.

“At first glance, we are quite frankly flabbergasted by Amazon’s 1Q 2018 results,” Anthony Chukumba of Loop Capital wrote in a note after the earnings.

Raising Prime Membership

Amazon can also afford to be cocky and raise prices, despite all the money pouring in.

The company just announced plans to raise U.S. Prime subscription service fees to $119 from $99 per year. This will kick in May 11 for new customers and June 16 for renewals. With more than 100 million paid Prime subscription members globally, Amazon can surely afford to lose a few who protest over the price hike.

To be fair, there is a cost to the company for all the convenience Prime provides customers. Amazon’s fulfillment costs continue to rise, and in Q1, Amazon’s fulfillment costs, the costs Amazon incurs to deliver packages, soared to $7.8 billion, up from $4.7 billion a year ago, according to MarketWatch.