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Such a surge in Amazon’s revenue resulted from the coronavirus pandemic that made people stay at home and order online instead of doing shopping in stores.
The leading e-commerce retailer Amazon.com Inc (NASDAQ: AMZN) has announced financial results for Q3 that ended September 30, 2020. Due to a surge in online sales, Amazon reported a 37% growth in third-quarter revenue, topping Wall Street estimates and proving its position of the pandemic beneficiary.
Amazon CFO Brian Olsavsky said:
“Our Q3 results largely reflect the continuation of demand trends we saw when we exited the second quarter, with strong demand and sales growth across our major product categories globally, including hardlines, consumables, softlines and media. We also continue to see strong Prime member engagement. Prime members continue to shop with greater frequency and across more categories than before the pandemic began.”
Amazon Q3 Results: Key Points
Wall Street analysts were predicting $92.7 billion revenue, $6.2 billion adjusted net income, and $7.41 earnings per share for Amazon. However, the company performed much better. Amazon Q3 revenue of $96.15 billion shows a 37% year-over-year increase in sales, even without the benefit of Prime Day that took place in October. Such a surge has resulted from the coronavirus pandemic that made people stay at home and order online instead of doing shopping in stores.
Another reason for sales growth is the upcoming holiday season. And shoppers are likely to buy online as well. To handle the increased demand, Amazon is even planning to add 100,000 seasonal jobs to its current workforce of close to 900,000 people.
Amazon CEO Jeff Bezos stated:
“We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season.”
Further, Amazon reported an increase in operating income that totaled $6.2 billion, compared with $3.2 billion in Q3 2019. Its net income increased to $6.3 billion in the third quarter or $12.37 per diluted share.
As for Amazon’s highest-margin business, Amazon Web Services, it has grown 29% year-over-year, to $11.6 billion. Sales from third-party merchants grew 55%. Amazon’s advertising business reported $5.4 billion in sales, a 51% increase from the year-ago period. Physical store sales plunged by 10% to $3.78 billion.
The company has already made some predictions for the fourth quarter of 2020. In particular, Amazon expects its net sales to be between $112.0 billion and $121.0 billion, or to grow between 28% and 38% compared with Q4 2019. Operating income is expected to be between $1.0 billion and $4.5 billion, compared with $3.9 billion in Q4 of last year.
Amazon Stock Down in Pre-Market
Despite the pandemic, Amazon stock is one of the most powerful players on the market, along with Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL), and Facebook Inc (NASDAQ: FB). Year-to-date, Amazon shares are 73.77% up.
Yesterday, Amazon stock closed 1.52% up, $3,211.01 per share. In early trading today, Amazon shares have declined by 1.96% to $3,147.80. Amazon’s market cap is $1.58 trillion.