Amazon.com (AMZN) Stock Up +12 Percent on Earnings, AWS Results
Shares of Amazon.com Inc. (AMZN) were trading up +48.73 or +12.34 percent to $439.15 per share in Friday's premarket after announcing better than expected earnings yesterday after the market close. The sharp rise in the stock was in large part due to the disclosure of Amazon Web Services financial results. Amazon.com stock closed at $389.99, up +0.19 or +0.05 percent in Thursday's regular trading session.
Seattle, Washington based Amazon.com Inc.
Amazon.com reported a net loss of -$57 million or -$0.12 per share compared to net income of $108 million in the same period one year ago. Analysts expected the company to report a loss of -$0.14 per share. Revenue for the first quarter came in at $22.7 billion, a 15 percent increase over the same period last year and beating analyst estimates of $22.4 billion. The increase in revenue was affected by a strong U.S. Dollar, which lowered the figure significantly. Nevertheless, the company's one year return was +18.37 percent, with a year to date return of approximately +26 percent.
What surprised analysts was the first time disclosure of Amazon Web Services finances, which showed a profit of +$265 million for the first quarter versus +$245 million one year ago. Amazon Web Services revenue for the first quarter came in at $1.57 billion, up +49 percent from the first quarter of 2014 and in line with analyst expectations. At the rate reported, the company's Web Services division would earn over $1 billion profit per year.
Jeff Bezos, founder and Chief Executive Officer of Amazon.com said in the company's press release that, "Amazon Web Services is a $5 billion business and still growing fast - in fact it's accelerating. Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon. We strive to focus relentlessly on the customer, innovate rapidly, and drive operational excellence. We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long term. We are so grateful to our AWS customers and remain dedicated to inventing on their behalf.
Amazon.com's chief competitors in the cloud business, which include IBM, said that its cloud business had annual revenue of $7.7 billion, up +75 percent, while Microsoft cited its Azure unit had annualized revenue of $6.3 billion. Nevertheless, neither company released information on operating income, margin or expenses as Amazon.com has.
The company released its guidance for the second quarter, with net sales expected to be between $20.6 billion and $22.8 billion with a growth rate of between 7 and 18 percent compared with the second quarter of 2014. Operating income is expected to be between a negative of -$500 million and +$50 million, which compares to a loss of -$15 million in the same period one year ago. Amazon.com stock is reacting significantly to the news, with the stock up over +12 percent in this morning's premarket and making a new all-time high.
Other News About AMZN
Cloud Wars: Can Microsoft Overtake Amazon?
Some analysts are skeptical that Microsoft's Azure can overtake Amazon Web Services in the cloud wars.
JP Morgan Hikes Amazon Price Target To $535
In a report published today, JPM raises its price target for Amazon.com from $375 per share to $535.
Other Stocks in the News
Google shares rise after online ad sales drive revenue higher
Google reports higher quarterly revenue and profit from online ad sales.
Comcast calls quits on merger with Time Warner Cable
Comcast confirmed today that it was terminating its merger with TWC and its agreement with Charter Communications.