Amazon shares soar on surprise profit, market value tops Wal-Mart's
By Anya George Tharakan and Mari Saito
(Reuters) - Amazon.com Inc (AMZN.O: Quote) shares surged more than 17 percent on Thursday as the online retailer posted an unexpected quarterly profit, pushing its market value above that of Wal-Mart Stores Inc (WMT.N: Quote), the world's largest retailer.
Combined with a bullish forecast for the third quarter, upbeat comments from company executives on Amazon's Prime delivery service and rapid growth in its cloud computing service, Amazon delivered the kind of results Wall Street is looking for.
Seattle-based Amazon, which last reported a profit in the 2014 fourth quarter, has often faced worries by investors that its heavy spending on new ventures will not actually pay off.
"My quick take is that management has a lot of discretion over spending and appears to understand that investors prefer profits to losses," said Michael Pachter, analyst at Wedbush Securities. "If they keep delivering profits, the stock should work."
Amazon's shares had languished for much of last year as the company failed to deliver sustainable profits. The shares traded as low as $284 last October, virtually half of the price reached in after-hours trade on Thursday.
Prime, which for $99 a year also provides exclusive access to certain movies, music and Kindle books, is getting new subscribers at rates "higher than we've ever seen," Chief Financial Officer Brian Olsavsky told analysts on a conference call.
Membership was growing faster outside the United States than inside, helped in part by a recent one-day sale event called "Prime Day," Amazon said. It declined to disclose membership figures.
"Growth has been fueled in large part by Prime growth and also (item) selection growth so it's been a huge driver both in North America and international segments," Olsavsky said in a separate call for reporters. Continued...