After an incredibly harsh second half of 2014, Amazon is starting to show strong performance on Wall Street. The last quarter we finally got insights into Amazon Web Services, and in the second quarter Amazon reported a surprise profit.
It is a measly $92 million (£59 million) in profit, but enough to get investors extremely excited about the future of Amazon. So much so, in under 24 hours the company has received $40 billion (£25 billion) in market cap, with shares up 17 per cent in after hours trading.
Amazon’s revenue also surpassed most expectations hitting $23.2 billion (£15 billion), $800 million (£515 million) higher than expected. To add even more good news, Amazon Web Services noted an 81 per cent increase since last year in revenue, an increase in $1.82 billion (£1.17 billion) since last year.
Everything is looking on the up for the e-commerce giant, after two solid quarters in 2014 where it lost a total of $1.1 billion (£710 million) in net loss. Most of the losses came from the Fire Phone, which cost Amazon millions in inventory storage it was incapable of selling.
Most investors are happy to see Amazon get back on track with Prime focus. Some analysts claim Amazon is being overvalued considering its rather average profits, compared to Apple, Google and other older companies that make much more in quarterly profit, yet do not receive anywhere near the applause from Wall Street.
Considering Amazon is never going to be a company that puts profit before expansion, we expect this is one of the few times we will see a quarterly profit. Especially if Amazon continues to work on the Fire Phone 2, another failure in the waiting unless the company updates a ton of the first generation features.