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Jul 30, 2020

Amazon profit tops estimates despite COVID-19 expense

Shopify doesn't really need to worry about Amazon: Analyst


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See Full Stock Page » Inc. reported profit that far exceeded analysts’ estimates, showing that the e-commerce giant can make money despite spending heavily to keep operating through the COVID-19 pandemic.

Second-quarter earnings were US$10.30 a share on revenue of US$88.9 billion, beating analyst projections of US$1.51 per share on sales of US$81.2 billion.

Revenue in the current quarter will range from US$87 billion to US$93 billion with operating income of US$2 billion to US$5 billion, the Seattle-based company said Thursday in a statement. Analysts estimated an operating profit of US$3.04 billion on sales of US$86.5 billion.

Amazon said its forecast included more than US$2 billion in expenses related to the coronavirus outbreak. The company typically spends a lot of money in the third quarter preparing for the busy holiday shopping season.

“This really puts any concerns investors had about profitability to rest,” said RJ Hottovy, analyst at Morningstar Inc. “They are getting more efficient despite COVID-19 and firing on all cylinders.”

Shares rose about 6 per cent in extended trading, continuing a 65 per cent surge this year that has outperformed the S&P 500 Index. The stock closed at US$3,051.88.

As the world’s largest web retailer, Amazon has benefited from a stampede online by consumers trying to avoid physical stores during the pandemic. The company has also spent heavily hiring workers to help it keep up with the spike in online orders as well as on measures -- temperature checks, masks, sanitizer -- to protect frontline warehouse workers from COVID-19.

“As expected, we spent over US$4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing,” Chief Executive Office Jeff Bezos said in the statement.