Online retail giant Amazon posted the biggest one-day gain since 2012 last week after blowing fourth quarter 2021 earnings estimates out of the water, despite missing on revenue growth. Yet the numbers were less impressive than they might have first appeared.

Amazon shares jumped from $2,776.91 to $3,152.79 on 3 February with investors rallying behind earnings of $27.75 per share, surging past consensus forecasts pitched at $3.71 thanks to a 17% price hike for Amazon Prime users in the US, soaring AWS cloud profits and emerging  advertising revenue.

Analyst Benedict Evans noted that made Amazon’s ad revenue similar in size to the entire global newspaper industry. Statista put global newspaper annual ad spending at $29.5 billion. YouTube posted $28.8 billion ad revenue for 2021 whole popular social networking platforms Pinterest and Snap posted Q4 ad revenue of $846.7 million $1.3 billion respectively.

Management had pitched expectations low alongside its third quarter results which, while a triumph for expectations management, means the numbers for the last three months of the year weren’t quite as stellar as they might have seemed on the surface.

The beat relative to expectations was supported by $11.8 billion one-off gain linked to its stake in electric vehicle play Rivian which enjoyed a blockbuster IPO in November 2021. Having listed at $78 a share, Rivian roared above $170 but has since sagged to $60. Amazon’s guidance for the first quarter of 2022 also failed to inspire.

Sales growth slipped to 9.4% year-on-year in Q4 and the mid-point of management’s guidance for Q1 2022 revenues coming in between $112 billion and $117 billion implies a 5.5% year-on-year advance. This represent a significant slowing from the levels of growth which investors got used to during the pandemic.

Cash generation was weak, perhaps reflecting pressures around supply chain and staffing costs, the North American retail business made a loss for the first time since divisional numbers were broken out in 2015 and margins were at their lowest level since the third quarter of 2017.

Amazon has become a keenly watched stock by thousands of UK investors because of the huge influence it exerts on US and global stock markets.

A current $1.61 trillion market cap adds up to around 3.6% of the entire S&P 500 index, behind only Apple, Microsoft and Alphabet. That mean that it is owned by large numbers of active funds and most mainstream US tracker funds and ETFs.

Amazon, clearly still has levers to pull, as reflected by its hike in the cost of a Prime subscription in the US but its next quarterly earnings, expected in April, may not be given such an easy ride by the market.

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