Amazon stock prices | Amazon announces $4 billion "On COVID-related expenses"
Amazon mentioned on the first quarter update "The best investment we can make is in the safety and well-being of our hundreds of thousands of employees"
Booming amazon stocks may have caught your eyes. But is it so simple?
The intellectuals are worried that the rise will soon see some downs. As the graph shows, amazon did well in mid-February and just in a month’s time saw a deep down in mid-march.
So at the time, it is very hard to predict when and how low the share prices will fall now. Better to take no chances.
Not getting deep into the analysis of stocks let’s come back to what the amazon first quarter report has to say.
Let us take a quick look at the past year and this year’s analysis.
Common shares outstanding plus shares underlying stock-based awards totaled 513 million on March 31, 2020, compared with 507 million one year ago.
Net sales increased 26% to $75.5 billion in the first quarter, compared with $59.7 billion in first quarter 2019. Excluding the $387 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 27% compared with first quarter 2019.
Net income decreased to $2.5 billion in the first quarter, or $5.01 per diluted share, compared with net income of $3.6 billion, or $7.09 per diluted share, in first quarter 2019.
These are the statistics that show amazon has a good hold on the market. Although the profits could not meet the estimations, still Amazon had a good profit during these Corona crisis. Comparing to the automobile industry which has seen an all-time low. Many other important businesses have also seen big losses.
With all this Amazon stock prices are touching skies.As per Amazon, it has an because people are now preferring Amazon to order their requirements. Amazon has highlighted this as the key to make higher profits during this pandemic.
Below is global net revenue of Amazon.com, by product group
You may see high potential in amazon but as said above amazon has some different plans.
Shareholders may worry as amazon plans to spend all of its second-quarter operational profits on the coronavirus pandemic, estimated to be around $4billion.
These funds will be used for:
- To get products to customers faster and maintaining employee safety
- This includes investments in personal protective equipment
Enhanced cleaning of amazon facilities
Less efficient process paths that better allow for effective social distancing
Higher wages for hourly team
- Also hundreds of millions to develop their own COVID-19 testing capabilities
As mentioned by authorities of amazon “There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented share-owners will understand and embrace our approach, and that in fact, they would expect no less.”
Amazon is supporting small businesses by partnering with American Express and its Stand for Small initiative, providing free use of business tools that help with virtual communication and collaboration, such as Amazon Chime, Amazon WorkDocs, and Amazon WorkSpaces.
Amazon is also enabling small businesses to use the cloud at no charge for 12 months with AWS Free Tier.
AWS is continuously used to support small businesses, the White house’s COVID-19 High-Performance Computing Consortium
To support third-party sellers in Amazon’s stores, many of whom are small and medium-sized businesses, Amazon has paused Lending loan repayments from March 26 to April 30.
What can we expect in the next quarter?
The Earning Per Share(EPS) has gone down in Q1-2020 compared to that in Q4-2019. Further is estimated to go low in Q2-2020. Nasdaq shows the view on the same.
Also, Amazon has mentioned their estimation for Q2-2020 as below.
Second Quarter 2020 Guidance
Net sales are expected to be between $75.0 billion and $81.0 billion or to grow between 18% and 28% compared with the second quarter of 2019. This guidance anticipates an unfavorable impact of approximately 70 basis points from foreign exchange rates.
Operating income (loss) is expected to be $1.5 billion, compared with $3.1 billion in the second quarter of 2019. This guidance assumes approximately $4.0 billion of costs related to COVID-19.
As a conclusion Q2-2020 will be great for ones aspiring in Amazon careers. Amazon has a lot to offer to its workers this pandemic in terms of safety and pay, both. Amazon is also trying to improve its services to gain trust in these COVID times. As for investors, Q2 may not give expected returns as Amazon has mentioned to use the profit to fight this pandemic.