Amazon’s huge fourth-quarter profit was largely driven by the IPO of EV maker Rivian

Attendees tour the Amazon booth where a Rivian electric truck with Amazon Alexa integration is on display, Jan. 7, 2020, at the Consumer Electronics Show (CES) 2020 in Las Vegas, Nevada. ROBYN BECK/AFP via Getty Images

Amazon has just delivered good news to its investors and less good news to its loyal customers. The e-commerce giant on Thursday reported surprising fourth-quarter earnings of $14.3 billion, or $27.75 per share, far beating Wall Street analysts’ expectations of $3.61 per share and making stocks climb as high as 14% on Friday morning.

During the holiday season quarter, Amazon raked in record revenue of $137.4 billion, a 9.4% jump from a year earlier. However, Amazon hasn’t actually made a lot of money from its core online retail business. The bulk of the fourth quarter profit, nearly $12 billion, came from the company’s investment in electric vehicle startup Rivian Automotive, which went public during the quarter.

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Rivian’s Nasdaq listing in November was the biggest IPO of 2021 and the sixth-biggest in US history. The startup, which has not started mass production, was valued at $66 billion when it first hit the market.

Without Rivian, Amazon’s fourth quarter earnings report would have looked very different. At the end of the third quarter of 2021, Amazon was forecasting a “breakeven” fourth quarter with zero profit possible – despite a record sales outlook – due to labor shortages, inflation of costs and supply chain issues.

These worrying factors all turned out to be true. “As expected over the holidays, we saw increased costs due to labor shortages and inflationary pressures, and these issues continued into the first quarter due to omicron,” CEO Andy said Thursday. Jassy, ​​who took over from Jeff Bezos last year.

Hence bad news for Amazon customers: Starting February 18 for new subscriptions and March 24 for renewals, the price of Amazon’s Prime subscription will increase to $139 per year, or 14, $99 per month, down from $119 per year or $12.99 per month.

During Thursday’s earnings call, Amazon chief financial officer Brian Olsavsky cited inflation and rising costs as the main reasons for the price increase, the first in nearly four years. He added that he believes Amazon Prime still offers the best value for consumers with free two-day delivery, the expansion of same-day delivery and a host of streaming services including Amazon Prime Video. , Audible and Amazon Music.

On a monthly basis, Amazon Prime is cheaper than a Netflix Standard and HBO Max subscription. The downside, however, is that Amazon sells Prime subscriptions every year, while the other two streaming services allow you to change your mind from month to month.

Olsavsky said with the price increase, Prime members can expect new benefits in 2022.

Amazon's huge fourth-quarter profit has nothing to do with its core online retail business


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