Tech

Amazon shares soar after monster earnings report

Amazon shares soar after monster earnings report

Amazon's results bucked expectations that it would plow more profit into investments, as it has done in the past. The shares are up about 30 percent so far in 2018. Its shares trade at a premium to many peers.

But despite the revelation the company has rising costs, Amazon's confirmed in its first-quarter earnings that "subscription services revenue", which includes Prime memberships, grew 60 percent to $4.1 billion.

Shares of Amazon rallied in after-hours trading, putting the stock near its all-time high of $1,617. Analysts estimated operating income of $1.13 billion of operating income and sales of $52.3 billion. In addition to perks like free two-day shipping, Prime offers members access to Amazon's music and video streaming services. The company plans to spend more on video content this year.

The Seattle-based company reported a 43 percent jump in revenue to $51 billion, beating the $49.9 billion analysts expected.

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Profit hit $1.6 billion, or $3.27 a share, compared with $724 million, or $1.48 a share, a year ago. "Prime provides a unique combination of benefits, and we continue to invest in making this Prime program even more valuable for our members". In the previous quarter, which included the busy holiday shopping season, it had a profit of more than $1.8 billion.

Amazon CFO Brian Olsavsky said the company hadn't increased the price of membership since March 2014 (it jumped from $79 to $99 then), and in the time since "we continue to increase the value of Prime". It's the second straight quarter of accelerating growth for the profitable unit.

Meanwhile, revenues of Amazon Web Services, Amazon's cloud service division, surged 49 percent to $5.44 billion.

Earlier in the week, Amazon announced it would begin delivering packages straight to certain vehicles parked at homes, offices and other publicly accessible areas.