Amazon.com Inc said on Thursday it is raising the price of its Prime subscriptions to offset higher shipping costs and wages, even as it beat expectations for profit in the final quarter of the year.
Shares of the online retailer were up 12% in after-hours trading, after falling nearly 8% in the regular session on weak prospects for Facebook owner Meta Platforms Inc.
Amazon’s profits included an $11.8 billion pre-tax gain from its stake in electric car maker Rivian Automotive.
Following its windfall profits from the boom in home shopping during the pandemic, Amazon has poured money into its operations to manage supply chain struggles, as well as paid bonuses to attract hundreds of thousands of workers in a tight job market.
Annual fees for US subscribers last rose four years ago, from $99 to $119, and four years earlier, from $79.
Analysts had said it was time for a hike to cover the company’s higher costs.
The monthly dues in the United States will increase from $12.99 to $14.99, and the annual dues from $119 to $139, effective February 18 for new members.
With more than 200 million members worldwide, Prime is an incentive for consumers to direct more of their purchases to Amazon so they can get the most out of their subscriptions. Dues in the fourth quarter alone grew 15% to $8.1 billion.
Still, Amazon forecast first-quarter sales below Wall Street estimates, projecting between $112 billion and $117 billion, or 3% to 8% growth.
Analysts had expected $120.04 billion, according to IBES data from Refinitiv.
Net income for the holiday quarter, Amazon’s busiest of the year, rose to $14.32 billion, or $27.75 per share, from $7.22 billion, or $14.09 per share, a year earlier.