Amazon announced Thursday that it would be boosting the price of its Prime membership for U.S. customers, citing rising costs as the reason behind the decision.
A contractor working for Amazon.com cleans a delivery truck in Richmond, California, U.S., on Tuesday, Oct. 13, 2020. (Photographer: David Paul Morris/Bloomberg via Getty Images)
In a letter to investors outlining its fourth quarter earnings, the company stated that increased wage and transportation costs along with its expansion of membership benefits has led the online retail giant to increase its Prime fees for the first time since 2018.
Monthly Prime memberships will go from $12.99 to $14.99, and annual memberships will be hiked to $139 from the current $119. The price change will go into effect for new members starting Feb. 18, and existing members will see their fees go up on the date of their next renewal after March 25.
For the quarter ending Dec. 31, Amazon blew earnings per share projections out of the water. Wall Street had expected EPS of $3.44, but the retailer delivered a staggering $27.75. Investors appeared to like the results, as the company's stock shot up more than 18% in after-hours trading following the report.
"A big thank you to employees across Amazon who overcame another quarter of COVID-related challenges and delivered for customers this holiday season," CEO Andy Jassy said in a statement.
"Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, and the fact that we’ve continued to grow on top of that in 2021, our Retail teammates have effectively operated in peak mode for almost two years," Jassy said. "It’s been a tremendous effort, and I’m appreciative and proud of how hard our teams have worked to serve customers."
"Amazon delivered a blowout quarter, defying the odds and in the process saving the tech sector from further losses," Investor.com senior analyst Jesse Cohen said in a statement FOX Business following the results. "The company beat expectations on the performance of almost all business units, overcoming supply chain issues and labor shortages."
"Despite the positive reaction, Amazon faces a challenging period ahead as it deals with slowing sales growth and rising costs in the post-pandemic environment," Cohen continued.
"That said, Amazon's impressive results are just what the tech sector needed to stop the bleeding," he added. "The e-commerce giant's big beat could be the much-needed catalyst to spark a rally in the tech space."