Amazon May Have Saved the Stock Market. But It’s Looking Even Worse for Meta.

Enter Amazon. The e-commerce giant’s fourth-quarter earnings per share of $27.75 crushed Wall Street expectations of $3.77. A large part of that was driven by its stake in electric-truck maker

Rivian Automotive, but the company also announced an Amazon Prime price hike for the first time since 2018. Investors loved it and the stock was more than 11% higher in premarket trading Friday.

It’s on track for a daily market cap gain of more than $150 billion. It would need to move higher still in regular trading to beat the approximately $180 billion added by

Apple after its earnings last week.

The stock market could end up seeing one of the biggest one-day market cap gains by a company, just a day after Meta recorded the biggest daily drop, losing $232 billion.

It’s more of a recovery bounce than anything else, though, after Amazon stock tumbled 8% on Thursday. The megacap names have long been immune to market volatility but seemingly not anymore.

The relief rally developing Friday wasn’t for everyone, though. Meta stock only mustered a small rise. And some rivals aren’t sharing its pain.

Snap, which has also previously flagged the impact of Apple privacy changes, reported a surprise profit and strong daily active-user growth. Investors had feared Meta’s problems over engagement would be felt by the Snapchat owner. Snap stock fell 24% yesterday but was soaring close to 50% in premarket trading Friday. It was a similar story for

Pinterest.

—Callum Keown

*** Join MarketWatch financial crime reporter Lukas I. Alpert today at noon as he talks to K2 Integrity Managing Director Raymond Dookhie about the latest in what financial institutions are doing to battle fraud and stay in regulatory compliance in a fast-changing world. Sign up here.

***

Amazon Raising Price of Prime Membership to $14.99 a Month

Amazon reported a strong fourth quarter on Thursday, including growth in its AWS cloud unit and its advertising business, and said it is hiking the price of its Amazon Prime membership.

• Amazon will raise the price of Prime membership to $14.99 a month, up from $12.99, or $139 annually, up from $119. The hike will start Feb. 18 for new members, and Mar. 25 for current members when their memberships renew. It is the first increase since 2018.

• Amazon said fourth-quarter sales grew 9% to $137.4 billion, in line with what analysts had expected. Profit rose to $14.3 billion, or $27.75 a share. Earnings were distorted by a noncash $11.8 billion pretax gain on the company’s stake in Rivian.

• Amazon Web Services posted revenue of $17.8 billion, up 40% from last year, ahead of the $17.4 billion Wall Street had expected. Advertising revenue was up 32% to $9.7 billion, higher than the consensus forecast of $9.4 billion. Subscription services revenue increased 15% to $8.1 billion.

• CEO Andy Jassy said labor shortages and inflation increased costs over the holidays, “as expected,” and persisted in the first quarter because of the Omicron coronavirus variant. Despite those challenges, he said: “We continue to feel optimistic and excited about the business as we emerge from the pandemic.”

What’s Next: Amazon is projecting sales of $112 billion to $117 billion for the March quarter, up between 3% and 8%. It expects operating income of between $3 billion and $6 billion.

—Janet H. Cho

***

Biden’s Fed Nominees Defend Qualifications at Senate Hearing

President Joe Biden’s three Federal Reserve nominees—Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson—testified Thursday before the Senate Banking Committee, answering questions about inflation, climate change, and their qualifications, The Wall Street Journal reported.

• Raskin has been nominated to serve as vice chair for supervision of the Fed’s Board of Governors, the top bank regulator role. Cook and Jefferson, meanwhile, have been nominated to serve on the Fed’s Board of Governors.

• Sen. Pat Toomey (R., Pa.) told Raskin that using the role she’s up for to address climate change was beyond its mandate. Raskin said she wouldn’t try to restrict lending to companies that are contributing to climate change, saying the Fed “should not pick winners and losers.”

• White House press secretary Jen Psaki on Monday said that Raskin’s “background, her credentials, her experience is unquestionable,” that she believes firmly in the independence of the Fed, and that she should be judged on her qualifications, rather than because her husband is Rep. Jamie Raskin (D., Md.).

• Cook, a professor of economics and international relations at Michigan State University, was questioned about her work on racial inequality and how hate-related violence has hurt economic growth. Jefferson, vice president for academic affairs and an economics professor at Davidson College, said tackling high inflation should be a priority.

What’s Next: Senate Banking Committee Chair Sherrod Brown (D., Ohio) wants a committee vote on the nominees on Feb. 15 before any wider Senate vote. If confirmed, Cook would be the first Black woman on the Board of Governors, while Jefferson would be the fourth Black man, the White House said.

—Janet H. Cho

***

Americans Still Waiting for Free Covid-19 Tests to Arrive

A sampling of 25 Barron’s journalists who ordered free Covid-19 tests from the federal government suggests that less than half of the more than 60 million U.S. households who requested the tests two weeks ago may have received them.

• Nine of the 25 who ordered tests on Jan. 18, the first day the U.S. Postal Service’s website opened, had received them by Thursday. The group includes residents in the New York City metropolitan area, Philadelphia, Washington, D.C., Granby, Mass., Charlottesville, Va., Chevy Chase, Md., Cleveland, and Palo Alto, Calif.

• The Biden administration initially said the tests would typically ship within seven to 12 days after they were ordered. So far, 240 million tests have been requested—that is about one-quarter of the one billion free tests Biden said the government would order.

• The website to order tests opened after U.S. coronavirus cases started declining from last month’s peak. Stephen Stanley, chief economist for Amherst Pierpont, told Barron’s that while having tests is good, “the federal government was reactive rather than proactive, and its efforts are bearing fruit well past the point of maximum need.”

• The Biden administration is sourcing free Covid-19 tests from several contractors, including

  
  Abbott Laboratories, manufacturer of the BinaxNOW tests;

  
  Quidel Corp., maker of the QuickVue test; Swiss pharmaceutical company

  
  Roche; German medical device company

  
  Siemens Healthineers; and iHealth Labs, based in Sunnyvale., Calif.

What’s Next: An Abbott spokesperson told Barron’s Thursday that the company has “been working 24/7 to scale our operations to 100 million a month in March.” And on Tuesday, Psaki said that 100 million free N95 masks have been shipped to pharmacies and other sites.

—Janet H. Cho

***

Oil Tops $90 for First Time in 7 Years

U.S.-based oil futures settled above $90 a barrel on Thursday for the first time since October 2014.

• West Texas Intermediate oil futures settled Thursday up 2.3%, to $90.27 a barrel. The futures have gained for five consecutive sessions and are up 20% this year. WTI futures rose again early Friday above $91.50.

• The price surge signals optimism that the worst of Covid-19 will soon be over. Oil supplies are now nearly back to pre-Covid-19 levels, and demand has risen nearly all the way back too—with the exception of jet fuel.

• Several analysts have predicted that oil prices will eclipse $100 a barrel in the months ahead, because supply isn’t growing fast enough to keep up with the expected surge in demand

What’s Next: While high oil prices can mean the economy is doing well, they also can hurt consumers, adding to inflation in other goods. “The last time oil prices were above $100, the term staycation became popular as consumers stopped traveling via car and plane opting for summer vacations in their hometowns,” wrote Rob Thummel, senior portfolio manager at TortoiseEcofin.

—Avi Salzman

***

Markets Shocked by Hawkish Turn of Europe’s Central Banks

The Bank of England and the European Central Bank surprised investors Thursday by taking tougher stands than expected on rocketing inflation.

• The Bank of England raised its key rate from 0.25% to 0.5% but indicated that four of the nine-strong Monetary Policy Committee had called for a hike to 0.75%.

• It was the second rate increase in a row for the BoE, who also said it would start shrinking the portfolio of government bonds it has amassed through quantitative easing.

• The ECB kept its key rate at its record low of minus 0.5%, but ECB President Christine Lagarde said there was “unanimous concern” about rising inflation and refused to discount the likelihood of a rate increase this year, as she had in the past.

• 
  Goldman Sachs said Friday it now expects the ECB to raise rates twice this year, with 0.25% hikes both in September and December—which would bring the key rate to zero.

What’s Next: With the Federal Reserve poised to raise rates at its March meeting, the first quarter of 2022 marks the end of the loose monetary policies decided by central banks the world over to help the global economy deal with the pandemic’s impact. The U.S. jobs report Friday will be the next key data to watch.

—Pierre Briançon

***

Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to [email protected].

1. The Beijing Winter Olympics begin today with China maintaining a zero-Covid-19 policy. It has taken steps that may change travel and trade postpandemic that include:

a. Lockdowns and mass testing

b. Barrier buildups along its southern border

c. A but not B

d. A and B

2. The S&P 500 index fell 5.3% in January, its largest monthly decline since the start of the pandemic in March 2020 and its worst January performance since when?

a. 2008

b. 2009

c. 2010

d. 2011

3. Tom Brady, the 44-year old storied football quarterback, announced he is retiring after 22 seasons in the NFL. How many Super Bowl titles has he won?

a. Five

b. Six

c. Seven

d. Eight

4. Alphabet reported earnings that crushed Wall Street expectations and it announced a stock split, the second in its history. What is the rate of the split?

a. 20-for-1

b. 10-for-1

c. 5-for-1

d. 2-for-1

5. Meta Platforms reported a disastrous earnings report and outlook as it looks to reimagine itself as a metaverse company. How much did the stock price drop in the following day of trading?

a. More than 10%

b. More than 15%

c. More than 20%

d. More than 25%

Answers: 1(d); 2(b); 3(c); 4(a); 5(d)

—Barron’s Staff

***

—Newsletter edited by Zoe Szathmary, Neal Templin, Camilla Imperiali, Steve Goldstein, Callum Keown