Sometimes, it's difficult to figure what Wall Street and investors are thinking. Amazon.com, which on Jan. 29 reported that it netted a loss in fiscal 2014 and also revealed that its fourth-quarter profit slipped, nonetheless saw its stock price improve 12 percent in after-hours trading.
The stock closed at $311.78 and then shot up $38.15 (12.24 percent) to $349.93. Who knew?
[NEWS UPDATE: Amazon's stock continued to rise on Jan. 30, jumping another 11 percent—about $34.93—in morning trading. The surge added a whopping $16.5 billion to Amazon's corporate value; that increase alone is more than the total market cap of nearly half the companies on the S&P 500 list, according to MarketWatch.]
In Q4 2014, Amazon reported net income of $214 million, or 45 cents a share, compared with $239 million, or 51 cents a share, a year earlier. Still, it was higher-than-projected net income, despite sales growth below forecasts. Amazon generally has impressed investors with rapidly growing sales and investments, despite lack of high profits.
The Seattle-based retail and Web services provider had reported three losing quarters in 2014, and those losses were the key impactors in the company's yearly earnings, which showed an overall loss of $241 million on the year, as opposed to a net gain of $274 million in 2013.
Amazon Web Services, which it has for the last several years, was the earnings report's clear highlight. The company reported usage growth close to 90 percent year-over-year for the fourth quarter, as well as more than 1 million regular customers.
Up until now, Amazon has not broken out profit and loss numbers on AWS, but the company said that it will begin detailing them starting in Q1 2015 because it is such a major pillar of its business.
A key reason for the company's fiscal problems was the smartphone business. Amazon invested tens of millions of dollars into the FirePhone—the first model of which failed to sell well and eventually had to be pulled from the market. The company said it still had about $80 million in the second FirePhone in inventory and intends to keep selling it.
The company reported a 20 percent increase in net sales, due largely to increasing the price of Amazon Prime memberships in March 2014.
"On a base of tens of millions, worldwide Prime membership grew 53 percent last year—50 percent in the U.S. and even a bit faster outside the U.S.," CEO Jeff Bezos said.