Amazon shares skyrocket on strong earnings post-Whole Foods buy

Jeff Bezos swallowed 460 Whole Foods stores and never lost his footing.

Amazon.com, the mogul’s e-commerce giant, blew away Wall Street expectations in the third quarter, producing profits and sales that exceeded expectations.

The solid quarter — where Amazon Web Services, retail sales and services like Amazon Music all produced solid increases — sent Amazon shares soaring 8 percent in after-hours trading, to over $1,000 a share.

Amazon reported sales rose 34 percent in the quarter, to $43.7 billion, from a year ago — while profits, at $256 million, were flat compared to last year.

Amazon shelled out $13.4 billion for the upscale grocery chain — its largest-ever acquisition — and gained positive media coverage for lowering prices.

“We were pleased by the better-than-expected profitability in what is clearly an investment year for Amazon,” Loop Capital analyst Anthony Chukumba wrote in a note.

The company’s solid quarter was underpinned by the introduction of three new Echo devices and a 59 percent rise in subscription services, which includes Prime and Amazon Music.

Amazon, in a statement, said it expects fourth quarter sales to increase between 28 percent and 38 percent — to between $56 billion and $60 billion.

On a conference call to discuss third quarter results, Chief Financial Officer Brian Olsavsky said some credit for the solid quarter also has got to go to Prime Day — the annual event where goods and services are drastically marked down.

“We had a very strong Prime Day [in July], which carried into the quarter,” said Olsavsky, adding that the event was “stronger than we had anticipated.”

The company also got a boost from launching month-to-month Prime, which allows consumers to pay the $99 annual Prime membership fee on a monthly basis — for $10.99.

“Monthly Prime has been a big driver,” Olsavsky added.

The company continues to integrate Whole Foods into its ecosystem as well, introducing Amazon lockers into some of its stores.

The lockers allow Prime customers to return and pick up items that they bought online at Whole Foods stores.

“We do see a lot of opportunity with Whole Foods,” and the lockers there, said Olsavsky.

Industry experts have speculated that Amazon will also get into the pharmaceutical business.

While Olsavasky steered clear of speaking specifically about the pharmacy business, the executive did say that, “Whole Foods gives us a vast head start” to expand into a number of categories.

Despite the attention on the Whole Foods acquisition, Amazon’s profit engine continues to be its cloud computing division known as Amazon Web Services. AWS revenue jumped 42 percent, to $4.6 billion, in the quarter.

Olsavsky flagged Amazon’s video business as growth engine as well.

“The video business is having great results with our Prime customers,” he said. “It drives higher membership, and we know Prime members who watch Prime videos spend more on Amazon.”