Company announces a hike in the cost of prime for its US customers, after share price soars to record high of $1,625.
Amazon has reported that it has more than doubled its profits to $1.6b in the first three months of 2018.
The results sent the company’s shares soaring 7% to a new record of $1,625 in after-hours trading, adding billions to the fortune of its founder, Jeff Bezos.
During the earnings call, the company, which said last week that it had signed up more than 100m people to its Prime subscription service, revealed that the cost of a Prime subscription would increase to $119 per year for US customers, effective from 11th May for new subscribers and to renewed subscriptions from 16th June. It represents the first price hike in the US since March 2014.
The company’s chief financial officer Brian Olsavsky said that the price hike was a reflection of the increased cost of handling same-day, one-day and two-day shipping and “increased value” for customers.
In the first quarter of 2018 Amazon collected more than $550m a day in revenue from Amazon.com sales, web hosting, TV production and Whole Foods, the upmarket US grocery chain it bought last year.
Amazon also reported strong growth at its highly profitable cloud computing division, Amazon Web Services (AWS).
AWS, which hosts companies including Netflix, Airbnb and the CIA, reported a 49% hike in sales in the first quarter to $5.44b. AWS made a profit of $1.4b – the majority of Amazon’s profits over the quarter.
The company’s success has allowed it to announce a big investment in Amazon Studios, its in-house TV production firm that makes The Grand Tour, presented by Jeremy Clarkson, and the dystopian series The Man in the High Castle.
Amazon is the world’s second-biggest company after Apple, with a market value of $723b. Many experts expect it to overtake the iPhone maker and become the world’s first trillion-dollar company. Analysts at Credit Suisse believe Amazon’s shares – which have risen by more than 50% in the past six months – could soon hit $1,800.
