Amazon stock gains 5% before hours after posting biggest profit in pandemic
July 31, 2020
Amazon stock news
“(Reuters) – Amazon.com Inc on Thursday posted the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants surged during the coronavirus pandemic.
Shares of Amazon, the world’s largest online retailer, rose 5% in after-hours trade.
While rival brick-and-mortar retailers have had to shut stores during government-imposed lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar. The company said revenue jumped 40% from a year earlier to $88.9 billion.
Amazon had forecast it might lose money in the just-ended second quarter because it expected to spend some $4 billion on protective equipment for staff and other expenses related to COVID-19. It did just that – and still earned $5.2 billion – double its net income from a year prior.
Jeff Bezos, who founded the company in July 1994 and is the world’s richest person, said in a statement, “This was another highly unusual quarter.”
Amazon’s shares have risen by more than 60% this year, adding to the wealth of Bezos, its biggest stockholder. The S&P 500 is virtually flat.
Jesse Cohen, senior analyst at Investing.com, said Amazon’s business model sets it up “to expand its e-commerce dominance even more broadly as the global COVID-19 pandemic continues to flare.”
Online store sales jumped 48% to $45.9 billion in the second quarter. Meanwhile, merchants paid Amazon more to fulfill and sponsor their products in order to reach the company’s loyal customers. That resulted in a 52% and 41% jump in seller services revenue and other revenue such as from ads, respectively.
Amazon’s cloud services also saw higher demand as companies switched to virtual offices in the pandemic. Revenue from Amazon Web Services (AWS), which sells data storage and computing power in the cloud, rose nearly 29% to $10.81 billion.”
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