Amazon Surprises with Soaring Share PriceBy Lex Yaranu | Sunday, July 26th, 2015
A surge in pre-market trading on Friday for Amazon.com caught even some long time market watchers off guard. The online retailer reported the day before it received an unexpected second quarter profit and better revenue than projected. For those who wrote off shares in online retailers’ post-holiday season the net sales of $23.18 billion in the last three months up to June 30th were astounding considering the $19.34 billion net sales for this time last year for the Internet retail giant.
While the 27% net sale upswing isn’t impressing trend spotters, at least not yet, it is good news for those interested in the online market operating at more than break-even levels. Amazon typically reinvests profits, but this demonstrates its ability to show profit after cutting spending.
According to online market watchers this could demonstrate to investors that if online retailers want to make profits it’s possible. According to Chief Financial Officer Brain Olavsky Amazon’s Prime delivery which took off slowly in popularity has in the last few taken off, and with added subscribers it’s proving as profitable as the company hoped.
Another contributor for Amazon’s weekend surprise for investors was an unforeseen rapid growth in Amazon’s cloud computing service called Amazon Web Service with sales that grew 81% from last year for 8% total quarterly revenue. Following on the heels of a 49% growth in the first quarter the once maligned decisions on Amazon’s shift of focus appears to be paying off. Other new launches such as Amazon Business have yet to see the same growth.
The giant makes these gains while facing some of the stiffest e-commerce competition in years, and while some investors have taken flight. Amazon wouldn’t comment on rival companies, only stating a determination to remain invested in securing a foothold and continue to attract customers.
Amazon sent a strong message to future investors claiming the company expects net sales to grow in a range of $23.3 -$25.5 billion. This is compared to analyst’s median projections of $23.9 billion. Shares of the company took flight to 18.21 in pre-market trade Friday hitting $570.00 by 09:44GMT.Published in News & Analysis