Amazon 15th Consecutive Profitable Quarter turns in $3bn

Amazon traded for years without ever making a profit and investors stuck with the retailer come marketplace due to their explosive growth. Now, Amazon have turned in their 15th consecutive profitable quarter and for Q4 2018 they broke the $3 billion net income mark for the first time.

For the full 12 months of 2018, Amazon’s net income was $10 billion with Earnings per Share (EPS) of $6.04.

Comparing Amazon to eBay, it becomes obvious why some investors are less than happy with eBay’s performance. Whilst Amazon’s net income has jumped from $3 billion in 2017 to $10 billion in 2018, eBay’s net income has hardly grown from $2.17 billion in 2017 to $2.31 billion in 2018.

Both marketplaces are in their mid 20s, with Amazon founded in 1994 and eBay in 1995. Whilst Investors see Amazon predicting slightly subdued revenue predictions for the first quarter of 2019, eBay have only grown about 1% in the past year and growth is expected to be pretty flat through to 2020. There’s a big difference between eBay’s 1% growth and Amazon’s 10% and 18% growth guidance.

eBay’s full year net income for 2018 was $2.3 billion on revenues of $10.7 billion. This means that for the first time Amazon’s profit is roughly equivalent to eBay’s turnover. Amazon’s revenues were $142 billion which totally dwarfs eBay.

Much of Amazon’s profit comes from their AWS cloud hosting and advertising businesses, both of which are extremely profitable. It’s thought that their retail sales operate no more than about 5% margins after costs whilst third party sales from merchants generate in the region of 10% profit margins. That still leaves eBay with the challenge of holding off activist investors for the second time – after the PayPal spin off the last thing the company wants is to be forced to divest StubHub and the eBay Classifieds business to return profits to investors.