By: Real America News Updated 31 Jan 2022, 17: 06 pm EST
Amazon Prime subscribers should prepare for a possible rate hike, as falling stock prices and wage inflation have impacted company earnings.
Since Amazon launched Prime on the market in 2005, there have only been two increases in costs . In 2005, the rate went from $79 dollars to $99 dollars. Subsequently, in 2018 the cost was increased by $99 dollars to$100 dollars.
“Increase the rate this year, again, looks reasonable and would continue to trend every 4 years,” Jefferies analyst Brent Thill said in a new research note, according to Yahoo.
Under said parameter, Thill was of the opinion that the increase could be more than $31 dollars for the challenges facing Amazon. In this sense, the possible increase would affect the 500 million Amazon Prime subscribers in the United States.
“Amazon faces wage inflation due to labor shortages. Additionally, Prime penetration rates are low in international markets. I hope the rate increase is only for US subscribers”, said Thill.
According to the expert’s estimates, the rate increase for subscribers would imply a profit of $2 ,800 million dollars in additional sales over the course of 12 months, as long as the increase does not cause registered customers to drop out.
In addition to inflation for wage increases to employees, Amazon shares fell 13.6% in January, compared to a 9.2% drop in the S&P 500, as investors dump tech stocks amid threat of higher interest rates.
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