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As the cloud computing business grows and an investment increases profits, a booming economy and a persistent virus are beginning to weigh on Amazon’s retail business.
The company, whose profits, headcount and share price soared two years ago as Covid forced people to stay at home, said on Thursday Operating income in the fourth quarter fell to $3.5 billion, roughly half of the $6.9 billion it earned in the fourth quarter of 2020.
But net income, which was expected to fall at the same time, rose sharply thanks to what Amazon calls a “pre-tax valuation gain.” Rivian Automotive, an Amazon investment that went public in the fourth quarter. Amazon owns about 20 percent of the electric vehicle manufacturer. Net income increased to $14.3 billion compared to $7.2 billion a year ago.
This helped start a sharp rise in Amazon shares in after-hours trading and quickly pushed them up 17 percent. Shares fell 8 percent during regular trading as investors worried about what to expect.
“As expected during the holidays, we saw higher costs due to labor supply shortages and inflationary pressures, and these issues persisted in the first quarter due to ohmron,” Amazon CEO Andy Jassy said in a statement.
Amazon controls about 40 percent of the e-commerce market, and there was still plenty of demand in the quarter, which was always the biggest of the year. Revenue rose to $137.4 billion, slightly below analysts’ expectations.
AWS, Amazon’s cloud division, boosted its usual impressive performance, with operating revenue increasing 49 percent.
Amazon said it increased the annual price of its Prime shipping club from $119 to $139 to offset its increased costs. The company said this is the first increase since 2018.
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