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Amazon has a ton of pricing power when it comes to Amazon Prime, contends Cowen analyst John Blackledge.

“Think about what they have added since 2018,” Blackledge said on Yahoo Finance Live (video above). “All of the Prime video original content. They are adding NFL exclusive breaks for Thursday night football. They just won MGM. That’s just on Prime video. They doubled their fulfillment network and delivery speeds, and are getting faster. So they have added so much in the last four years.”

Amazon raised the monthly price for Prime earlier this year to $14.99 from $12.99. The yearly membership fee jumped to $139 from $119. Blackledge doesn’t expect another fee increase in the near-term.

“We looked at it [Prime pricing] on an a la carte basis, what the value was,” Blackledge added. “It was like $450 to $500 if you unpacked everything. That was four or five years ago. If we update that I am sure it would be more.”

That said, Amazon may want to consider another increase to Prime membership to offset its higher costs.

The company said late Thursday that first quarter profits were by a $6 billion hit from supply chain inefficiencies and general inflation. Amazon’s sale increase of 7% in the quarter, compared to a 44% rise in the same period last year, marking the company’s slowest growth rate in more than two decades.

Here were the main metrics from Amazon’s report, compared to consensus estimates compiled by Bloomberg:

  • Net Sales: $116.4 billion vs. $116.43 billion expected
  • Diluted EPS: –$7.56 per share vs. $8.40 per share expected

Amazon outlined a potential $4 billion hit to profits in the second quarter from the same factors, and promised to bring spending more in line with sales trends into the back half of the year.

The confluence of negative factors to the earnings release hammered Amazon’s stock on Friday.

Shares crashed 13% on Friday, reaching a fresh 52-week low.

Many Wall Street analysts struck a cautious near-term tone on the stock, lowering their price targets and slashing their profit estimates.

“We believe the market needs visibility into margin recovery, although we see a pathway to outperformance in the second half aided by easing comps, reduced cost headwinds, continued momentum at AWS, and 44% multiple compression since mid-2020,” Jefferies analyst Brent Thill said. “We reduce our price target to $3,700 (from $4,000) on lower peer valuations and recently inconsistent fundamental performance.”

Yahoo Finance’s Alexandra Semanova contributed to this story.

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