Amazon net sales increased 20 percent to $72.4 billion in Q4 2018

Amazon net sales increased 20 percent to $72.4 billion in Q4 2018

Amazon shares bounced around in after-hours trading on Thursday after the e-commerce giant reported better-than-expected revenue and earnings in its crucial holiday quarter, but a lukewarm sales forecast tempered the market's reaction.

Shares of the company fell 5 percent to $1,635 after the bell.

Amazon began removing a wide array of products from its India website late on Thursday to comply with the new foreign investment curbs that kick in on Feb.1 and disallow companies from selling products via vendors in which they have an equity interest.

The company said its fourth-quarter revenue increased 20 percent to $72.4 billion, topping an expected $71.87 billion according to analysts polled by Refinitiv. Net income for the quarter was $3 billion, up from $1.9 billion in the year-ago quarter. Amazon posted earnings per share of $6.04 on net income of $3 billion, surpassing a projected $5.68 per share. Amazon Web Services (AWS) marked another round of strong growth, recording revenue up 45% to $7.4 billion, and $2.2 billion in operating income.

This time a year ago, sales were $5.1bn and operating income was $1.35bn.

Amazon's digital ad business continued to grow well in the quarter, and it is working with big brands on improving tools and features, chief financial officer Brian Olsavsky said during an earning call with analysts. "Tens of millions of people worldwide" signed up for its Prime service, the company stated.

"Thanks to the growing devotion of its advertisers, Amazon's ad business is growing robustly", Monica Peart, senior director of eMarketer, said this week, noting that it was "chipping away at search ad dollars that were once going to Google".

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Nicholas Hyett, analyst at Hargreaves Lansdown, said the online retailer was "tightening its grip" on its customers with add-on services such as Amazon Prime which offer free delivery and other benefits. But its grand plans were thrown into chaos after the country implemented new e-commerce regulations, which some analysts believe could cut its growth in the market by as much as half this year.

Shoppers will spend $484 billion globally on Amazon this year, up 26 percent from 2018, and the Seattle-based company will capture more than half of all online spending in the US, according to EMarketer Inc.

Amazon shares have risen 14 percent since the beginning of the year, while the Standard & Poor's 500 stock index has increased almost 8 percent and the Nasdaq composite has risen 9.7 percent.

Still, a tight labor market, rising shipping costs and money-losing investments overseas remain threats.

"Amazon will now need to work doubly hard to achieve any future sales gains".

Amazon has historically delivered relatively little profit as it fulfills Bezos's strategy of investing to stay ahead.

Bezos, the world's wealthiest man and Amazon's biggest shareholder, announced earlier this month that he was divorcing MacKenzie, his wife of 25 years.

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