It is common for companies to beat Wall Street projections at times and when this happens the margin is not as much which explains why Amazon.com Inc (NASDAQ:AMZN)’s earnings report caused more than a ripple. When released on Thursday, 29th January, 2015, fourth quarter report of Amazon.com revealed an EPS of 45 cents which turned out to be almost three times more than what Wall Street had predicted, namely 17 cents. While it turned out to be lower than 2014’s EPS of 51 cents, it provided sufficient impetus to the stock to send it soaring by 14%.
What renders this news even better for Amazon.com Inc (NASDAQ:AMZN) is that this profit has been accrued after having sustained two consecutive loss-making quarters and much of the credit for this stellar performance goes to Amazon Prime. A membership program floated by this global online retail giant, Prime provides plenty of goodies to its subscribers in various forms, like free shipping for certain number of days, free ebooks, special deals and so on.
March, 2014, was witness to a hike in Prime’s subscription from $79 to $99 and there was some speculation as to whether this program would continue to be as popular. Amazon.com Inc (NASDAQ:AMZN)’s CEO Jeff Bezos was confident that this move would be accepted without any complaints and expressed as such in his following comment –
“When we raised the price of Prime membership last year, we were confident that customers would continue to find it the best bargain in the history of shopping. [I]n 2014 alone we paid billions of dollars for Prime shipping and invested $1.3 billion in Prime Instant Video.”
Contrary to lowering, the membership rose by 53% and part of the reason could be the pampering which Prime subscribers receive at the hands of the company.
CNBC covered the subject with Bernard Golden of Active State and the expert was definitely sure of the positive response which this report had received. He felt that the company had a lot going for itself and more importantly had control over its capital. Therefore, Amazon.com Inc (NASDAQ:AMZN) is certainly a company with huge opportunity and hence a lucrative stock for investors.
This article has been written by Vinita Basu.