Amazon is Increasing the Price of Prime Membership

Mr. Unpopular

Mr. Unpopular

SPX, rising 30 percent this year as of Thursday's market close, compared with the S&P's less than 1 percent decline. Analysts polled by Thomson Reuters expected earnings of $1.27 per share for the quarter.

The move comes only a few months after it raised prices in January for monthly Prime memberships from $10.99 to $12.99.

Amazon's stock increased 7 percent in after-hours trading Thursday following the release of the earnings report. But the price increase is only for US members, so it's probably closer to $1.6 billion or so.

The last time the annual fee was increased was four years ago.

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Amazon Prime, which features free two-day shipping and access to video and music streaming libraries, will soon cost $20 more per year. She replaces Roy Price, who left the company past year following sexual harassment allegations. The company said it has 100 million Prime members, though it did not break out how many of those people view videos on its platform. Those numbers are significantly better than what analysts expected, and up 43 percent from the same quarter past year. During an investor's call, Amazon CFO Brian Olsavsky said the paid subscription service was costing the company more to run.

Meanwhile there was a surge in revenues for cloud computing arm Amazon Web Services (AWS), up 49% to $5.4bn. So why is Amazon increasing the Prime membership cost?

Operating income increased 92% to $1.9 billion in the first quarter, compared with operating income of $1.0 billion in first quarter 2017. It's the second straight quarter of accelerating growth for the profitable unit. Analysts had a consensus revenue estimate of $49.87 billion for the quarter.

Earlier in the week, Amazon announced it would begin delivering packages straight to certain vehicles parked at homes, offices and other publicly accessible areas.

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