If I understand correctly, their net sales went up nearly 100 billion dollars in 2021, but their small increase in income entirely came from AWS.
It's a pretty common theory that their retail division is just around the corner from reaping massive economies of scale. But they just had one of the biggest retail years ever had by a company in history and might have lost money overall.
They are making billions from retail indirectly now. Retail proper can break even. Advertising makes most of their profit outside of AWS. A large part of the advertising revenue is in retail from sellers paying to have their product offerings show up in search results.
Reaping economies does not happen the quarter/year you grow fast, it takes time to realize that. At high growth phase you are spending a lot on inefficient processes and it takes time to normalize that ( even for Amazon)
Also last year was expensive for logistics, very expensive in part due to the supply chain bottlenecks and delays and using alternative shipping like flying more than ships etc. However prices for shipping on Amazon has not really gone up that much, the lack of profitability may reflect that as well.
Does anyone without Prime really miss it? Or did you cancel and regret it? Mine is up for renewal at the end of this month, fairly certain I'm not going to renew regardless of a price hike.
1. To profit they'd have to slow down investments in improvements to logistics, and they didn't. It doesn't seem like the year to do it?
2. Increased labor costs.
You can't figure this stuff out from first principles; you have to look at what they're doing.
The most significant piece of information, in my opinion, is that this is the first time that Amazon has broken out advertising services. This disclosure might be contributing to their stock performing well after hours, given their guidance miss.
Advertising grew 32% year over year to $9.7 billion during the quarter, which puts them third after Google ($61.2 billion) and Facebook ($28.3 billion).
Forward looking guidance is made by the company for the next quarter in the current quarter. Missing guidance means that company which lot of visibility into its sales and operations had unanticipated changes to its operations and that is generally bad.
Analysts estimates are made by Wall Street predicting performance of the company without insider info (in theory), top analysts generally get access to companies they cover while company management are not supposed to disclose any material non public information in such meetings, even when following the law to letter lot of indirect information would become available, Matt Levine has written often on Regulation FD [1] . The point is estimates have some basis in fact and information as well.
Most of their net income was from the Rivian investment?
Net income increased to $14.3 billion in the fourth quarter, or $27.75 per diluted share, compared with $7.2 billion, or $14.09 per diluted share, in fourth quarter 2020. Fourth quarter 2021 net income includes a pre-tax valuation gain of $11.8 billion included in non-operating income from our common stock investment in Rivian Automotive, Inc., which completed an initial public offering in November.
> With the continued expansion of Prime member benefits as well as the rise in wages and transportation costs, Amazon will increase the price of a Prime membership in the U.S., with the monthly fee going from $12.99 to $14.99, and the annual membership from $119 to $139. This is the first time Amazon has raised the price of Prime since 2018. For new Prime members, the price change will go into effect on February 18, 2022, and for current Prime members, the new price will apply after March 25, 2022, on the date of their next renewal.
Wow, $14.99/month is a stark difference with the €2.99/month that they charge for a Prime subscription here in The Netherlands. I wonder if they will increase the subscription fee here to the same level once they reach the desired market share in the video streaming and e-commerce spaces here.
Another huge stock surge for a company that is already huge, similar to Google two days ago. A portfolio composed of 10 of the biggest, most dominant tech and payment processing companies would have posted an annual CACR since 2009 of 35%. [1] It would also have smaller drawdowns than the S&P 500. That is as good as Renaissance Medallion (after fees). A 2x leverage version of such a hypothetical fund would have done 10-20% better than Medallion before fees.
[1] https://greyenlightenment.com/2022/02/01/why-infrastructure-...
Increasing the cost of Prime now??? My recent prime orders have all exceeded 1-2weeks for delivery.
Prime is really losing its stickiness for me:
The only things I get from Prime that are of value to me are:
1) 5% off all purchases using a Prime CC.
- I can get 2% with other cards and have the freedom to pick and choose where I buy from.
2) Free shipping (that once was quick, but now it isn't and I have had no communication as to why and when it will return)
- $139 pays for a lot of shipping - particularly if I am patient and aggregate orders.
Dropping Prime gives me the moral benefit of kicking a monopolizing data thief to the curb. Starting to sound like a no-brainer.
Do you lose the 5% if you aren't a prime customer? I though that was just 5% on Amazon purchases but I could be wrong. But I agree in terms of speed of delivery, a lot of items aren't prime (super dark patterns on this front) and the ones that are get delayed by a few days normally. I don't use Prime Video or anything else from Amazon so maybe I should re-consider my subscription. They are now just shy of what I pay for /every/ JetBrains product annually with a whole lot less useful for me.
The stock was already down a lot in the last few days. Investors just had a moment of relief to learn that the reality was not as bad as they imagined.
The numbers were pretty bad, big miss on revenue and guidance below analyst expectations. It seems the market was pricing in even worse numbers, given the terrible stock performance over the last quarter and last 18 months. It's really only up 6-7% over yesterday's close after taking out today's fear drop related to the abysmal FB report yesterday. After FB's most disastrous ER in modern history for a megacap, just about anything looks better in comparison.
The change in cash flow especially cash flow less leases leads me to believe they are massively expanding either data centers, warehouses, or both. New aws regions? New amazon country launches? Or more if each in their existing locales? Either way, those are some hefty new investments they put cash down for.
Walmart only announced their prime competitor in 2020 (Walmart+) and AWS is absolutely ripe for disruption on many fronts, including bandwidth fees. If you look around at cloud providers, it is getting to be a very crowded space (AWS, GCP, Azure, OCI, IBM, etc.) and there is no guarantee AWS will remain the go-to for the low hanging fruit web hosting use cases which can be currently handled by virtually everybody.
If anything, I would point to Firebase and GCP as the tools that have driven the most innovation over the last few years, and AWS is looking more and more like a utility with a very big service cost (bandwidth) that can absolutely be disrupted.
AWS has many competitors, definitely not unassailable. For a new company to go cloud, I would be happy shopping between Azure/AWS/GCP(but not really) to get a desirable deal.
Amazon however has this logistics empire built over past decade. It would remain untouchable for a long time.
I see such a big disconnect between AMZN and GOOGL. Google is so much cheaper compared to Amazon. And this past quarter showed, Google is executing at a much better pace and quality.
Google has only one business - search, and so far hasn't been able to show an ability to build another money printing machine, and actually an opposite - they are failing at cloud for example. Compare that to AMZN which has already 2 - the store/marketplace and the AWS. That difference between 1 and 2 is humongous. The tech history is littered with one-trick ponies.
[+] [-] legitster|4 years ago|reply
It's a pretty common theory that their retail division is just around the corner from reaping massive economies of scale. But they just had one of the biggest retail years ever had by a company in history and might have lost money overall.
[+] [-] gregwebs|4 years ago|reply
[+] [-] manquer|4 years ago|reply
Also last year was expensive for logistics, very expensive in part due to the supply chain bottlenecks and delays and using alternative shipping like flying more than ships etc. However prices for shipping on Amazon has not really gone up that much, the lack of profitability may reflect that as well.
[+] [-] granzymes|4 years ago|reply
[+] [-] stjohnswarts|4 years ago|reply
[+] [-] Moeancurly|4 years ago|reply
[+] [-] skybrian|4 years ago|reply
1. To profit they'd have to slow down investments in improvements to logistics, and they didn't. It doesn't seem like the year to do it? 2. Increased labor costs.
You can't figure this stuff out from first principles; you have to look at what they're doing.
[+] [-] marricks|4 years ago|reply
[+] [-] deltree7|4 years ago|reply
[+] [-] gitfan86|4 years ago|reply
[+] [-] granzymes|4 years ago|reply
Advertising grew 32% year over year to $9.7 billion during the quarter, which puts them third after Google ($61.2 billion) and Facebook ($28.3 billion).
[+] [-] gpt5|4 years ago|reply
I think that the market is happy for three reasons:
1. Algorithms misreading the high earnings ($11.8B out of the $14.2B is just a Rivian accounting adjustment).
2. AWS experiencing 40% YoY growth (accelerating QoQ for a while, while both Azure and Google Cloud are decelerating).
3. Advertising doing well.
[+] [-] manquer|4 years ago|reply
Analysts estimates are made by Wall Street predicting performance of the company without insider info (in theory), top analysts generally get access to companies they cover while company management are not supposed to disclose any material non public information in such meetings, even when following the law to letter lot of indirect information would become available, Matt Levine has written often on Regulation FD [1] . The point is estimates have some basis in fact and information as well.
[1] https://www.bloomberg.com/opinion/articles/2021-03-09/sec-go...
[+] [-] steelstraw|4 years ago|reply
Net income increased to $14.3 billion in the fourth quarter, or $27.75 per diluted share, compared with $7.2 billion, or $14.09 per diluted share, in fourth quarter 2020. Fourth quarter 2021 net income includes a pre-tax valuation gain of $11.8 billion included in non-operating income from our common stock investment in Rivian Automotive, Inc., which completed an initial public offering in November.
[+] [-] nostromo|4 years ago|reply
[+] [-] Lehman_Brothers|4 years ago|reply
[+] [-] blue_box|4 years ago|reply
[+] [-] solidangle|4 years ago|reply
[+] [-] myroon5|4 years ago|reply
[+] [-] anm89|4 years ago|reply
They are up half the entire value of Facebook in after hours trading.
They are up about the GDP of Finland in after hours trading.
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] thehappypm|4 years ago|reply
[+] [-] paulpauper|4 years ago|reply
[+] [-] wintermutestwin|4 years ago|reply
Prime is really losing its stickiness for me:
The only things I get from Prime that are of value to me are:
1) 5% off all purchases using a Prime CC. - I can get 2% with other cards and have the freedom to pick and choose where I buy from.
2) Free shipping (that once was quick, but now it isn't and I have had no communication as to why and when it will return) - $139 pays for a lot of shipping - particularly if I am patient and aggregate orders.
Dropping Prime gives me the moral benefit of kicking a monopolizing data thief to the curb. Starting to sound like a no-brainer.
[+] [-] joshstrange|4 years ago|reply
[+] [-] IAmWorried|4 years ago|reply
[+] [-] coliveira|4 years ago|reply
[+] [-] topicseed|4 years ago|reply
[+] [-] pyrrhotech|4 years ago|reply
[+] [-] ganeshkrishnan|4 years ago|reply
[+] [-] blawson|4 years ago|reply
[+] [-] chrisseaton|4 years ago|reply
[+] [-] paulpauper|4 years ago|reply
[+] [-] ABeeSea|4 years ago|reply
[+] [-] alangibson|4 years ago|reply
[+] [-] qqtt|4 years ago|reply
If anything, I would point to Firebase and GCP as the tools that have driven the most innovation over the last few years, and AWS is looking more and more like a utility with a very big service cost (bandwidth) that can absolutely be disrupted.
[+] [-] karmasimida|4 years ago|reply
Amazon however has this logistics empire built over past decade. It would remain untouchable for a long time.
[+] [-] pulse7|4 years ago|reply
[+] [-] openknot|4 years ago|reply
[+] [-] lvl100|4 years ago|reply
[+] [-] trhway|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] oblio|4 years ago|reply
[+] [-] apollo1213|4 years ago|reply
[+] [-] post_break|4 years ago|reply
[+] [-] jsiaajdsdaa|4 years ago|reply