Amazon Hits 150 Million Prime Memberships, Stock Soars 13% After Huge Q4 Earnings

E-commerce giant easily tops Wall Street’s earnings expectations during the holiday season

Last Updated: January 30, 2020 @ 1:45 PM

Amazon’s move towards one-day shipping did little to hurt its bottom line during the holiday season, with the e-commerce giant reporting on Thursday afternoon its Q4 earnings easily surpassed Wall Street’s expectations. At the same time, Amazon said it reached a new milestone when it comes to Prime memberships during the fourth quarter.

The company’s earnings per share of $6.47 trumped analyst projections of $4.04 EPS. Amazon’s Q4 sales also topped estimates, increasing 21% year-over-year to $87.4 billion; analysts had projected $85.9 billion in sales.

But the first thing to jump out, when reading Amazon’s letter to shareholders, is that it hit 150 million Prime memberships during the fourth quarter. The $119 annual subscription comes with several perks, including faster shipping and access to Amazon Prime Video. Amazon last shared an update on its Prime membership when the company hit 100 million Prime members in 2018.

“Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” CEO Jeff Bezos said in a statement.  “We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year. Members now have free two-hour grocery delivery from Amazon Fresh and Whole Foods Market in more than 2,000 U.S. cities and towns.”

Investors immediately responded on Thursday afternoon, with Amazon’s shares increasing 13% in early after-hours trading, hitting about $2,122 per share. Those gains pushed Amazon back into the trillion-dollar company club, alongside Microsoft, Alphabet and Apple.

Amazon’s aggressive delivery strategy led to a major increase in Q4 shipping costs, which increased 43% year-over-year to nearly $13 billion. Other standpoint points: Amazon is far behind Facebook and Alphabet when it comes to advertising, but its ad business is growing at a healthy clip, climbing 41% from the same time period a year prior to $4.8 billion in sales. Revenue from Amazon’s physical stores, which is mostly just its Whole Foods grocery stores, dropped 1% year-over-year, hitting $4.36 billion in Q4 sales.

From a content perspective, Amazon’s original series “Fleabag” earned two Golden Globes victories earlier this month, including the award for best comedy or musical TV show. Despite sharing a Prime membership update, Amazon did not reveal any data on how many of those members are watching its shows and movies.

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