Amazon dips as tepid profit forecast overshadows 3rd quarter earnings blowout

  • Shares of Amazon dipped 2% during premarket trading on Friday after the e-commerce giant reported its profits are likely to fall below the Street’s estimates in the fourth quarter.
  • The profit estimates overshadow Amazon’s blowout third-quarter earnings where sales growth skyrocketed 37% and revenue guidance beat expectations.
  • Amazon said its fourth-quarter operating profits will fall between $US1.0 billion and $US4.5 billion, below the $US5.81 billion Street estimate, as COVID-19 related costs pile up.

Amazon dipped as low as 2% in premarket trading on Friday after its fourth-quarter profit estimates disappointed investors and overshadowed its better-than-expected third-quarter earnings results.

The e-commerce giant shattered third-quarter earnings expectations, reporting $US12.37 earnings per share versus the estimated $US7.41 per share. Amazon reported $US96.1 billion ($US92.71 expected) in revenue and sales growth of 37%.

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But Amazon said operating profits are likely going to drop in the fourth quarter as it expects to spend roughly $US4 billion on costs related to COVID-19. Amazon said its operating profits in the fourth quarter will fall between $US1.0 billion and $US4.5 billion, below the $US5.81 billion Street estimate.

Amazon also reported on Thursday that its Amazon Web Services had $US11.6 billion in sales in the third quarter, in line with Street expectations. Physical store sales dropped 10% to $US3.78 billion while Amazon’s advertising business reported $US5.4 billion in sales. The third quarter was the first time Amazon’s employee count has crossed the 1 million mark. The e-commerce giant now has 1.13 million employees, a 50% increase from last year.