Amazon Stock Soars on Good Enough Earnings. The Price of Prime Is

Amazon (ticker: AMZN) shares were jumping 12.6% to $3,129 in premarket trading. Even with the premarket rally, the stock remains lower for the year to date.

Amazon also said it is increasing the price of its Amazon Prime membership for the first time since 2018. Amazon will now charge $14.99 a month, up from $12.99, or $139 on an annual basis, up from $119. The increase will be effective on Feb. 18 for new members, and starting March 25 for current members on the date of their renewal.

For the quarter, Amazon posted sales of $137.4 billion, up 9%, and about in line with Wall Street estimates, and consistent with the company’s forecasted range of $130 billion to $140 billion. The company said the latest quarter total was trimmed by about $1.3 billion due to unfavorable foreign exchange rates.

Profits in the quarter soared to $14.3 billion, or $27.75 a share, from $7.2 billion, or $14.09 a share, a year earlier. Latest quarter earnings include a non-cash $11.8 billion pre-tax gain on the company’s stake in the truck maker

Rivian Automotive

(RIVN). Operating income was $3.5 billion, above the company’s guidance range of break-even to $3 billion.

Results in the company’s core online stores business was soft, though perhaps not as bad as bears on Wall Street had feared. Online stores sales were $66.1 billion, down 1% from a year ago, and about $2.5 billion below Wall Street estimates. The same pattern was true for third-party seller services—sales were $30.3 billion, up 11%, but a miss relative to the Street consensus at $31 billion. Sales at physical stores were $4.7 billion, up 17%.

One major offset came from Amazon Web Services—the cloud unit had revenue of $17.8 billion, up 40% from a year ago, accelerating slightly from 39% growth in the December quarter, and ahead of the Wall Street consensus forecast at $17.4 billion. Meanwhile, Amazon also had a strong quarter in the advertising business, with revenue of $9.7 billion, up 32%, and ahead of the Street consensus forecast at $9.4 billion. Subscription services revenue were $8.1 billion, up 15%, but a little shy of consensus at $8.4 billion.

The strong results in both AWS and advertising show the growing power of the company’s diversification push—and they suggest that the issues that were evident in the December quarter earnings report from Facebook-parent Meta Platforms (FB) are not necessarily suggestive of a broader issue with online advertising. In fact, there is evidence that Facebook could be losing some…