Amazon Blows Past Expectations in the Third Quarter as Sales Soar During Coronavirus

E-commerce giant Amazon posted its third quarter financial results recently that blew away Wall Street estimates. Last week the company reported a blockbuster third quarter revealing that sales grew 7% YOY amid the coronavirus pandemic.

For the quarter Amazon reported GAAP earnings per share of $12.37 compared to the $7.55 that was expected by analyst estimates compiled by Bloomberg. Revenue at $96.1 billion was also ahead of the $92.7 billion that was expected per Bloomberg. Adjusted net income at $6.3 billion was also higher than the $6.2 billion expected.

The company had had reported $5.2 billion in quarterly profit in Q2 which means logging $6.3 billion in profit for Q3 represented a 200% year-over-year increase.

Looking ahead to the fourth quarter, Amazon expects revenue to fall between $112 and $121 billion, representing 28% to 38% growth. The fourth quarter will include its Prime Day event and holiday shopping sales. Analysts on average had expected revenue of 112.7 billion.

The company’s Prime Day was a big success. CFO Brian Olsavsky said on the earnings call, “I’d like to start by extending a big thank you to all the folks who worked hard to make this year’s Prime Day a great success, not only for our more than 150 million Prime members around the world, but also for the hundreds of thousands of small and medium-sized businesses who sell on our Amazon store, many of whom are facing their own challenges during this pandemic. These businesses thrived on Prime Day, with third-party sellers recognizing more than $3.5 billion in sales over the two-day global event. That’s a 60% increase compared to Prime Day last year.”

Olsavsky said during an earnings call: “In total, we have incurred more than $7.5bn in incremental COVID-related costs in the first three quarters of 2020, and we expect to incur approximately $4bn in Q4.”

Olsavsky added that the company had added 250,000 jobs in the third quarter, and 100,000 in the first month of the fourth.

Analysts remain optimistic on Amazon including Goldman Sachs. “We believe the market continues to underestimate the long-term value of the Amazon platform as the leader in both the movement of retail online and compute into the cloud. Therefore, we continue to believe Amazon represents the best risk/reward in the Internet sector,” Goldman Sachs said in a note. The firm has a “buy” rating on the stock.

Amazon also recently said it would add 100,000 seasonal jobs to its current workforce of close to 900,000 people to assist with increased demand. CEO Jeff Bezos stated, Two years ago, we increased Amazon’s minimum wage to $15 for all full-time, part-time, temporary and seasonal employees across the US and challenged other large employers to do the same. Best Buy and Target have stepped up, and we hope other large employers will also make the jump to $15. Now would be a great time.”

Bezos added that “offering jobs with industry-leading pay and great healthcare, including to entry-level and frontline employees, is even more meaningful in a time like this, and we’re proud to have created over 400,000 jobs this year alone”.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.