‘If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small.’
Are you thinking what we are thinking? Be humble. Sit down.... "You may want to take a seat" is not exactly a phrase shareholders want to hear in an earnings announcement. But that's exactly what Amazon told investors to do as it reported results from the Jan - March quarter. First, Amazon dropped key stats that revealed a lockdown-related sales surge (hoarding, confirmed)
- +26%: How much Amazon's sales jumped — the 'Zon racked up over $75B in total sales, their biggest 1st quarter leap ever (it's usually the slowest quarter).
- -29%: How much Amazon's profit fell — Bezos took home a smaller-than-expected $2.5B in profit, despite the sales boom. Amazon brought in way more money, but spent even way more.
Okay, now actually take a seat.... Amazon proceeded to explain that in the upcoming quarter, it expects to make around $4B in profit. Then, Amazon explained that investors can kiss that $4B in profit goodbye:
- Amazon plans to spend the entire $4B "and perhaps a bit more" on corona-related expenses like getting products to customers on time and keeping worried workers safe while they're working in warehouses.
- COVID-19 testing facilities, PPE equipment, and higher wages for hourly employees are all on the docket.
- Amazonians ≈ Sarahs. After hiring 175K extra workers to handle increased demand, there are now as many Americans getting an Amazon paycheck (840K) as there are Sarahs (842K) ha!
- Amazon stock has fallen nearly 8% since the announcement, dragging the market down with it. Guess some bummed investors got up from their seats.
Profiting from a disaster is a bad look... and Amazon doesn't want to look like it's doing that, especially since its sales surge was clearly related to the pandemic. For Amazon, the way customers and employees perceive it in the long run is more important than a few billion in profit. That's why Amazon went on to list 34 bullet points about everything it's doing to help employees, customers, and communities. It chose PR over profits.
Bezos’s fortune, meanwhile, has surged by more than $24 billion since the pandemic took the broader market for a roller-coaster ride, according to Fortune. That rise has lifted his net worth to a stunning $148.6 billion, according to Forbes, making him by far the richest person in the world, even after relinquishing much of his wealth to his partner in divorce proceedings back in July.