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Business

Amazon to invest all $4B in Q2 profit on coronavirus expenses

By
Nicolas Vega
Published April 30, 2020
Updated April 30, 2020, 9:26 p.m. ET

Amazon’s hotly anticipated earnings report on Thursday turned out to be a dud as the e-commerce juggernaut said it expects to spend $4 billion on coronavirus-related expenses this quarter.

In its first earnings report since the coronavirus crisis hit, Amazon said first quarter revenues soared 26 percent to $75.5 billion as COVID-19 quarantines have sent demand for its shipping services soaring.

But net income of $2.5 billion, or $5.01 per share, fell 30 percent over the year ago quarter amid costs. The company also said it expects to spend virtually all of next-quarter’s operating profit on its frontline workers amid criticisms that its fallen short in protecting them from COVID-19.

“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Amazon CEO Jeff Bezos said in a note to investors.

They did, sending the stock down more than 5 percent in extended trading.

“These aren’t normal circumstances,” Bezos said of Amazon’s earnings. “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.”

Investments include personal protective equipment for Amazon’s hundreds of thousands of workers, “enhanced cleaning” of its facilities, higher wages for hourly workers as well as “hundreds of millions” of dollars for Amazon to develop its coronavirus testing capabilities.

The massive investment arrives as Amazon has faced harsh criticism in recent weeks for the conditions its warehouse workers have been forced to toil under during the pandemic.

Amazon has already been forced to temporarily raise the pay of frontline workers by $2 an hour even as it has hired 100,000 new workers at its warehouses around the country.

Investments will also go toward fixing shipping backlogs that have deliveries that used to come in days now arriving in weeks.

Shares of Amazon were down 5.4 percent in extended trading, at $2,341.50.

Despite the downer earnings, Bezos has seen his net worth grow by more than $40 billion during the coronavirus pandemic as Americans have turned to his company for all their shopping needs.

The world’s richest man ended the day Thursday with a net worth of $147 billion, up from the $106 billion he had in late January.

Together with his ex wife, MacKenzie — herself the 18th richest person on earth after her lucrative divorce from Jeff, with a $48 billion fortune — the pair are worth just shy of $200 billion.