Amazon shares up 15 per cent in early trading on stellar results

Amazon.com shares rose in early trading, over 15 per cent to around $450 per share, after the company posted stronger-than-expected 1Q sales results.

The current price overtook the previous high of $408.06 set in January of 2014. Amazon reported solid 1Q net sales that rose 15 per cent to 22.72 billion from a year ago.

What was of particular interest in the sales figure was the fact that Amazon revealed numbers for its Amazon Web Services (AWS) unit for the first time.

The unit, which provides cloud computing and other services to companies such as Netflix, posted Q1 sales of $1.566 billion up from $1.055 billion a year ago.

Amazon CEO Jeff Bezos said in the first quarter press release, that Amazon World Sevices was a $5-billion business and still growing.

A number of Wall Street analysts were also bullish on results disclosed from the AWS unit.

According to Doug Anmuth, an analyst at JP Morgan, the company believed the recent AWS disclosure showed segment profitability that exceeded virtually all expectations, Fox Business reported.

He noted that high profitability of AWS gave him increased confidence in the business and also drove meaningful growth in his some-of-parts (SOP) valuation.

Bezos had invested heavily in building new warehouses and data centres, as also adding media content and services such as a marketplace for home-improvement professionals and a hotel-booking site.

He aims to offer more of what users need on Amazon and to convert occasional shoppers into Prime members, who paid $99 a year for delivery discounts and online streaming of music, movies and TV shows.

According to Robert Drbul, an analyst at Nomura Securities International Inc, for a company of this size to continue to generate this kind of revenue growth was nothing short of impressive, Financial Post reported and recommended buying the stock.

International sales were down 1.8 per cent to $7.75 billion in the first quarter, which according to Sucharita Mulpuru, analyst at Forrester Research Inc, showed weakness in the UK, Germany and Japan, where Amazon generated most of its overseas sales, the report added.