Amazon Hits New 52-Week High After Crushing Earnings Estimates

Amazon surpassed the $1 trillion market cap on Friday morning.

Amazon reported its fourth-quarter earnings on Thursday and the results were beyond what Wall Street was expecting. They were so good that on Friday morning, the company hit a new 52-week high and broke past the $1 trillion market cap once again. 

2019 was a busy year for Amazon as the company began investing heavily in making one-day Prime shipping a reality for its members. The latest earnings show that these investments are paying off. 

Here are four things you need to know about the company’s latest earnings report.

1. Amazon beat earnings and revenue guidance

During the fourth quarter, Amazon brought in $87.4 billion in revenue and reported earnings of $6.47 per share. This far exceeded Wall Street’s expectations of $86 billion in revenue and earnings of $4.03 per share.

The company’s operating profits in the U.S. did decline by 16% thanks to the roll-out of single and same-day shipping. But Amazon’s operating losses fell as well, so investors weren’t too concerned about this.

And sales for Amazon Web Services were up during the fourth quarter as well. Revenue reached $9.95 billion, which is up 34% from a year earlier. 

2. Amazon Prime memberships are growing

150 million households now have Amazon Prime memberships. This figure is up from 100 million memberships in 2018. This growth is largely due to the exceptional service Amazon provides and how it’s constantly raising the bar for its customers.

3. The company’s advertising business is taking off

When most people think of Amazon, they like either think of Amazon Prime or Amazon Web Services (AWS). But Amazon also has a very profitable advertising business.

During the fourth quarter, the company’s advertising business brought in $4.8 billion in revenue. This is a 41% increase from a year earlier. And there is still plenty of room for this segment of the company’s business to grow.  

4. Wall Street expects good things from Amazon

Not only were Amazon’s fourth-quarter earnings better than expected, but the company is just as optimistic about 2020. And Wall Street is unapologetically excited about Amazon’s prospects.
The company is considered a strong buy with a potential upside of more than 17%. Of the 35 analysts currently reviewing the stock, all but two recommend it as a buy.

Previous

Next