Amazon is generating gargantuan profits during the pandemic

Amazon profits
Photo via Steve Jurvetson/Flickr (CC BY 2.0)

Amazon collected more profits in the first nine months of 2020 than it did in all of 2019, according to the company’s third-quarter earnings report. 

The giant online marketplace continues to benefit from a pandemic-induced increase in e-commerce spending. According to data from IBM’s U.S. retail index and the U.S. Census Bureau, department store sales decreased by 75% in the second quarter of 2020 while e-commerce sales grew by 31.8% from the first quarter. 

Amazon reported a third-quarter profit of $6.3 billion and a total reported revenue of $96.1 billion, the most it’s ever made in the third period of any year. Amazon’s profits continue to climb despite the company spending close to $4 billion in coronavirus-related expenses, which include procuring Personal Protective Equipment (PPE), the enhanced cleaning of its facilities, and the increase in workers’ wages. 

The spike in e-commerce demand led to Amazon adding 250,000 jobs in the third quarter and 100,000 in the first month of the fourth.

“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,” said Amazon Chief Executive Jeff Bezos, whose personal fortune now exceeds $200 billion. “Offering jobs with industry-leading pay and great healthcare, including to entry-level and frontline employees, is even more meaningful in a time like this, and we’re proud to have created over 400,000 jobs this year alone.”

Amazon’s cloud computing offering, Amazon Web Services, contributed the most to the company’s record Q3 revenue. It provided $3.54 billion in operating profit while the e-commerce sector added $2.25 billion. Amazon reported close to $5.4 billion in ad revenue, a 49% year over year increase, while its physical store sales fell to $3.79 billion, a 10% decrease year over year. 

Despite the record numbers, Amazon’s stock price fell after the release of the Q3 earnings report, as the company’s fourth quarter forecast currently trails market expectations. 

Sources: MarketWatch, The Guardian, Tech Crunch

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