News

Topline Amazon is increasing the cost of its Prime service, the company announced Thursday, as its fourth-quarter earnings report showed a 9% year-over-year increase in revenue and met analysts’ expectations following a holiday season fraught with challenges.

Tractor trailer semi truck with logos for Amazon Prime service and text reading “There’s more to … [+] Prime, a truckload more,” in Walnut Creek, California, July 31, 2017.

Getty Images Key Facts The cost of Prime, which gives customers free one- or two-day delivery and access to perks like Amazon’s streaming service, is increasing to $139 per year or $14.99 a month—the price hike will take effect on February 18 for new members and after March 25 for current ones.

Amazon reported $137.4 billion in revenue in the quarter ending in December, up 9% from last year and roughly meeting analysts’ expectations of $138 billion.

The company booked $27.75 net earnings per share, up from $14.09 one year ago.

Amazon said this year’s Black Friday to Cyber Monday shopping weekend was its busiest ever.

Amazon shares jumped over 17% to $3,261.50 as of 4:50 p.m. in after-hours trading after the announcement.

Crucial Quote “As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” Amazon CEO Andy Jassy said. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

Big Number $119. That was Amazon Prime’s previous annual rate. Amazon last increased the cost of Prime in 2018 from $99, which increased from $79 in 2014.

Tangent While some analysts expected the cost of Prime to increase, given growing shipping costs, others pointed to the labor and goods shortage putting strain on Amazon as the reason for the hike. The company has increased some employee wages to compete with a strained labor market. Others pointed to the lack of new perks and recent unstable delivery times as a reason the company should hold the price of the service steady, according to Reuters.

Key Background Despite boasting their best-ever sales in the first quarter of 2021, Amazon and other tech giants, like Netflix, have seen their pandemic bubble burst throughout the year. The company’s profits took a hit in Q3, though year-over-year sales increased. During Q4 the company’s Web Services sector suffered a few major outages, which caused disruptions to their brands and other major companies and competitors that depend on their cloud capabilities. Based in Seattle, Amazon was founded as an online books retailer by Jeff Bezos in 1994. Though he departed as the company’s CEO in July and appointed Jassy, Bezos’ net worth remains one of the highest in the world at over $164 billion.