Amazon.com, Inc.(NASDAQ: AMZN) in the first quarter of FY 17 has posted better than expected profit and revenue in the first quarter and projected sales that may beat projections in the current period due to an influx of online shoppers who are abandoning stores and new business for its cloud-computing division.
Moreover, Amazon is leading the e-commerce in the U.S. with its $99-a-year Amazon Prime subscription, that includes delivery discounts, music and video streaming and photo storage that keep shoppers engaged with the website. The company had 80 million Prime subscribers in the U.S. as of March 31st, which is a growth of 36 percent from a year earlier, as per the Consumer Intelligence Research Partners. Wal-Mart Stores Inc., the competitor is enhancing their e-commerce offerings to slow Amazon’s momentum.
Amazon in the first quarter of FY 17 has reported the adjusted earnings per share of $1.48, beating the analysts’ estimates for the adjusted earnings per share of $1.08. The company had reported the adjusted revenue growth of 23 percent to $35.7 billion in the first quarter of FY 17, beating the analysts’ estimates for revenue of $35.3 billion. A combination of better profit margins in the cloud-computing unit and a smaller increase in shipping costs helped Amazon has beaten the earnings estimates. Amazon Web Services had a profit margin of 24.3 percent in the first quarter, compared with 23.5 percent a year earlier. The shipping expenses, a major cost for Amazon, has increased by 30 percent, the slowest pace in at least six quarters.
For the second quarter of FY 17, Amazon expects the operating income of $425 million to $1.08 billion on net sales expected to be in the range of $35.3 billion to $37.8 billion. That compares with operating income of $1.29 billion on sales of $30.4 billion in the same period a year ago. The analysts are expecting sales of $36.9 billion in the current quarter.
The Amazon stock rose after the announcement of the earnings and added $3.3 billion to the fortune of Jeff Bezos, putting him less than $5 billion away from becoming the world’s richest person. Bezos’ fortune surpassed $80 billion for the first time, as per the Bloomberg Billionaires Index.
Amazon stock has risen 48.01% in the last one year (source: Google Finance). According to tipranks.com, 35 analysts has covered the stock while recommending a “Strong Buy”. Amazon has an average price target of $997.61, which is a further upside of 8.63%.