Amazon surprised investors with its March quarter report after the bell on Thursday – it boosted sales but warned it could lose money in the current quarter as it too battles the impact of COVID-19.
But unlike many other companies that have battened down the hatches, raised new capital, borrowed billions to keep afloat in this time of lockdowns and social distancing, Amazon’s problems are the costs and rapidity of keeping supply lines going and keeping up with demand in the economies where it operates around the world.
The shares rose 4.27% in trading but fell 4.2% in after-hours trading on the commentary from chairman and CEO, Jeff Bezos.
The report showed sales topped $US75 billion in the first quarter, but profit declined.
Shares of the company dipped nearly 5% in after-hours trading Thursday. They are up more than 30% so far this year.
Amazon reported first-quarter earnings of $US2.5 billion, down from $US3.56 billion, in the first quarter of 2019. Revenue rose more than 25% to $US75.5 billion from $US59.7 billion in the year-ago period.
But for the current second quarter, the company said it could report operating losses of up to $US1.5 billion, though the high end of guidance was for $US1.5 billion in operating profit.
Analysts said that shows the conservatism of the company at a time when COVID-19 and its impacts as well as the lockdowns, are making it very hard to forecast anything with certainty.
Analysts had expected more than $US4 billion in operating profit in the second quarter, according to FactSet, but Chief Executive Jeff Bezos said he expects to spend that and possibly more.
“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Bezos said in Thursday’s announcement.
“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. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.”
Now, what will snarky investors make of that? Amazon and Bezos have always done what they wanted to do and ignored the moaning and groaning from investors about costs and profits. But Amazon has been delivering lately and investors have been used to the good news.
Will these comments from Bezos push Wall Street lower on the first day of May when trading resumes tonight? Hard to say but the tone and data were certainly not what analysts had been looking for.
