The source of Amazon.com’s namesake river may be uncertain, but there’s no doubt about where the online retailer’s surging revenue is flowing from: just about everywhere.
Amazon.com Inc.’s shares were up 12 per cent at $673 in premarket trading yesterday, a day after the company reported profit and revenue that swept away analysts’ estimates.
“It’s all just working,” JP Morgan analysts wrote in a research note.
“While it’s tempting to try to pull out each component of its strong 1Q [and generally recent] performance, we think it’s the combination of many factors – the ‘AMZN Flywheel’, Prime, a growing distribution footprint, getting closer to customers, 3P (third party), AWS… the list goes on.”
The Amazon Flywheel refers to founder Jeff Bezos’s strategy of offering the biggest selection of goods at the lowest prices and providing the best customer experience to create a “positive feedback loop”.
The third-largest US-listed company by market value, behind Apple Inc.
Amazon is also known for making bold investments in new business areas even at the expense of profits – a strategy that is often criticised by investors.
There was little criticism this time, though.
“We believe these results are further evidence that Amazon’s investment in infrastructure, logistics, and Web services is accelerating market share gains, cash flow growth and continued high returns on invested capital,” Goldman Sachs analysts wrote in a client note.
“In both North America and International, Prime continues to thrive and we believe continued investment in original content, expansion in existing markets and the still-large opportunity to add new markets offers lots of runway,” BMO Capital Markets analysts Daniel Salmon and William Lowden wrote.
Amazon’s Prime loyalty programme offers one-hour delivery, original TV programming and access to digital entertainment products such as Prime Music and Prime Video for an annual $99.
Amazon’s value, at $432 billion, makes it the third-largest US-listed company by market value, behind Apple Inc. and Google parent Alphabet Inc., both of which posted disappointing quarterly results.