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Amazon overtakes Walmart as world's most valuable retailer Amazon shares surge on surprise quarterly profit
(about 1 hour later)
Amazon is now worth more than supermarket giant Walmart after a surge in its share price following better-than-expected results. Amazon shares have surged almost 15% after it posted an unexpected profit on Thursday.
The online retail giant reported a $92m profit for the quarter to the end of June, surprising investors who had expected another loss. The online retailer reported a $92m profit for the three months to 30 June, surprising investors who had expected another loss. Sales rose by 20% to almost $23.2bn.
Its shares surged 16.9% to $559.18 giving Amazon a market value of $259bn, compared to Walmart's $232.5bn. The results send shares in Amazon up almost 15% to $553.85, making it worth $222bn.
The makes it the world's largest retailer based on market value. The company's stock has risen by 78% since the start of the year.
Amazon has not often reported a profit. Amazon has not often reported a profit and last did so for the fourth quarter of 2014.
Up until now, the 20-year old Seattle-based firm has relentlessly ploughed the cash it makes back into the business, with its investments mainly aimed at improving the delivery infrastructure at the heart of its business. The 20-year old Seattle-based company has reinvested profits in a bid to improve the delivery infrastructure at the heart of its business.
The strategy means it has mainly reported a loss, or a small profit. But analysts said the results showed the internet firm's investment in its own business were finally beginning to pay off. The strategy means it has mainly reported a loss, or a small profit. But analysts said the results showed the firm's investment in its own business were finally beginning to pay off.
'Magical trend''Magical trend'
They said the firm's revenue from Amazon's cloud operations - Amazon Web Services - which nearly doubled in the second quarter, showed that the firm was now well positioned to grow. Tevenue from its cloud operations - Amazon Web Services - nearly doubled in the second quarter, which analysts said showed the firm was now well positioned to grow.
Deutsche Bank analyst Ross Sandler said the fact it was increasing revenue and margins - the amount of money it makes after costs - was a "magical trend" that was being "rightfully rewarded".Deutsche Bank analyst Ross Sandler said the fact it was increasing revenue and margins - the amount of money it makes after costs - was a "magical trend" that was being "rightfully rewarded".
"After questioning the investment rationale for years, Amazon is seeing the fruits of its labors in both revenue growth and operating margin," said Deutsche Bank analyst Ross Sandler in a note to clients. "After questioning the investment rationale for years, Amazon is seeing the fruits of its labours in both revenue growth and operating margin," he wrote in a note to clients.
And Barclays analyst Paul Vogel said it was now optimistic rather than cautious on the company's growth prospects. Barclays analyst Paul Vogel said it was now optimistic rather than cautious on the company's growth prospects.
"The scale of their distribution network is starting to generate better incremental margins," he added."The scale of their distribution network is starting to generate better incremental margins," he added.
Amazon's chief financial officer Brian Olsavsky helped reassure investors that the trend would continue, saying that while it would continue to invest in "things that we think are big and important," it would also focus on keeping costs under control. Amazon chief financial officer Brian Olsavsky told investors that the trend would continue as the company would continue to invest in "things that we think are big and important" while keeping costs under control.