Amazon Dips 8% on $4 Billion Virus Costs Amid Prospect For 2Q Loss

Amazon.Com Inc.’s (AMZN) shares dropped almost 8% after the world’s largest online retailer told shareholders that it expects to incur $4 billion in coronavirus-related costs in the second quarter resulting in a potential loss during the same period.Shares in Amazon fell 7.6% to $2,286.04 in U.S. trading on Friday. The Seattle-based online retailer said it expects operating income in the second quarter to be in the range of a loss of $1.5 billion to a profit of $1.5 billion, down from the earnings of $3.1 billion it reported in the same period a year ago. The company sees net sales in the range of $75 billion and $81 billion, or to grow between 18% and 28% compared with the same quarter a year earlier. “From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” said Jeff Bezos, Amazon founder and CEO. “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances.”Bezos added that instead Amazon expects to spend the $4 billion, or possibly more, on COVID-related costs, which will go towards getting products to customers and keeping employees safe. The forecasted second-quarter profit will be spent on personal protective equipment, facilities cleaning, higher wages for hourly teams, and development of COVID-19 testing capabilities, he said. Amazon has procured 100 million face masks and purchased more than 1,000 thermal cameras and 31,000 thermometers, which are used to conduct mandatory daily temperature checks for employees and support staff throughout its operations sites and Whole Foods Market stores.The online retailer, who in March and April added 175,000 employees to cope with rising customer demand, said the company is looking to hire more workers. Increased pay for hourly employees and partners during COVID-19 will be nearly $700 million through May 16, it said.First-quarter results showed that net sales surged 26% to $75.5 billion compared with the same period last year, rising above the analysts’ average estimate of $73.6 billion. Net income declined to $2.5 billion, or $5.01 per diluted share, compared with net income of $3.6 billion, or $7.09 per diluted share, in first quarter of 2019.Wall Street analysts maintain a sweet spot for Amazon’s stock amid prospects that the strong demand for e-commerce services during the global coronavirus pandemic and beyond will continue to drive sales.Five-star analyst Brian Nowak at Morgan Stanley, who has a Buy rating on Amazon stock with a $2,600 price target, sees the company’s commitment to invest in protective gear for staff and customers as a potential point of competitive advantage. “Amazon results re-enforced our views that the current work from home and shelter-in dynamics are likely to lead to faster e-commerce growth, faster AMZN share gains and a longer AMZN growth runway,” Nowak said in a note to investors. “Further, we don’t believe consumer demand is the constraint to 2Q...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Amazon.Com Inc.’s (AMZN) shares dropped almost 8% after the world’s largest online retailer told shareholders that it expects to incur $4 billion in coronavirus-related costs in the second quarter resulting in a potential loss during the same period.” data-reactid=”12″>Amazon.Com Inc.’s (AMZN) shares dropped almost 8% after the world’s largest online retailer told shareholders that it expects to incur $4 billion in coronavirus-related costs in the second quarter resulting in a potential loss during the same period.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Shares in Amazon fell 7.6% to $2,286.04 in U.S. trading on Friday. The Seattle-based online retailer said it expects operating income in the second quarter to be in the range of a loss of $1.5 billion to a profit of $1.5 billion, down from the earnings of $3.1 billion it reported in the same period a year ago. The company sees net sales in the range of $75 billion and $81 billion, or to grow between 18% and 28% compared with the same quarter a year earlier.

“From online shopping to AWS to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” said Jeff Bezos, Amazon founder and CEO. “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances.”

” data-reactid=”13″>Shares in Amazon fell 7.6% to $2,286.04 in U.S. trading on Friday. The Seattle-based online retailer said it expects operating income in the second quarter to be in the range of a loss of $1.5 billion to a profit of $1.5 billion, down from the earnings of $3.1 billion it reported in the same period a year ago. The company sees net sales in the range of $75 billion and $81 billion, or to grow between 18% and 28% compared with the same quarter a year earlier.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bezos added that instead Amazon expects to spend the $4 billion, or possibly more, on COVID-related costs, which will go towards getting products to customers and keeping employees safe. The forecasted second-quarter profit will be spent on personal protective equipment, facilities cleaning, higher wages for hourly teams, and development of COVID-19 testing capabilities, he said.

Amazon has procured 100 million face masks and purchased more than 1,000 thermal cameras and 31,000 thermometers, which are used to conduct mandatory daily temperature checks for employees and support staff throughout its operations sites and Whole Foods Market stores.

” data-reactid=”14″>Bezos added that instead Amazon expects to spend the $4 billion, or possibly more, on COVID-related costs, which will go towards getting products to customers and keeping employees safe. The forecasted second-quarter profit will be spent on personal protective equipment, facilities cleaning, higher wages for hourly teams, and development of COVID-19 testing capabilities, he said.

The online retailer, who in March and April added 175,000 employees to cope with rising customer demand, said the company is looking to hire more workers. Increased pay for hourly employees and partners during COVID-19 will be nearly $700 million through May 16, it said.

First-quarter results showed that net sales surged 26% to $75.5 billion compared with the same period last year, rising above the analysts’ average estimate of $73.6 billion. Net income declined to $2.5 billion, or $5.01 per diluted share, compared with net income of $3.6 billion, or $7.09 per diluted share, in first quarter of 2019.

Wall Street analysts maintain a sweet spot for Amazon’s stock amid prospects that the strong demand for e-commerce services during the global coronavirus pandemic and beyond will continue to drive sales.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Five-star analyst Brian Nowak at Morgan Stanley, who has a Buy rating on Amazon stock with a $2,600 price target, sees the company’s commitment to invest in protective gear for staff and customers as a potential point of competitive advantage.

“Amazon results re-enforced our views that the current work from home and shelter-in dynamics are likely to lead to faster e-commerce growth, faster AMZN share gains and a longer AMZN growth runway,” Nowak said in a note to investors. “Further, we don’t believe consumer demand is the constraint to 2Q revenue growth…as the constraint seems to be more AMZN’s capacity and ability to fulfill the demand. This, in our view speaks to how behavior is shifting online and toward AMZN faster than even they can hire, train, build.”

Overall, Wall Street analysts share Nowak’s bullish outlook. Out of the 39 Wall Street analysts covering the stock in the last three months, 37 have Buys and the remainder are split between 1 Hold and 1 Sell adding up to a Strong Buy consensus rating. The $2,674.18 average price target implies 17% upside potential in the shares in the coming 12 months. (See Amazon stock analysis on TipRanks).

” data-reactid=”18″>Five-star analyst Brian Nowak at Morgan Stanley, who has a Buy rating on Amazon stock with a $2,600 price target, sees the company’s commitment to invest in protective gear for staff and customers as a potential point of competitive advantage.