Reports Q4 2020 results on Tuesday February 2, after the close
Revenue Forecast: $ 119.68 Billion
EPS Expectation: $ 7.16
When e-commerce powerhouse Amazon.com (NASDAQ 🙂 reports its fourth-quarter earnings later in the day, investors will focus on the company's rising costs, which have squeezed revenues despite rising sales.
Since the COVID-19 outbreak in March last year, Amazon sales are on the rise as people who stay at home continue to make more and more online purchases. This overwhelming demand is also responsible for driving up Amazon's costs, as the company invests in new warehouses and expands its delivery capabilities.
As the pandemic rages on, Amazon is spending billions of dollars on employee safety, increasing pay, improving delivery times, conducting medical tests for employees, and stabilizing the supply chain. The Seattle-based e-commerce behemoth reported in October that it now employs more than a million employees, with 1,125,300 full- and part-time employees at the end of the quarter, 50% more than a year ago.
While sales are expected to boom during the holiday quarter ending December 31, some business adjustments and higher expenses as a result of COVID-19 would continue to weigh on profitability.
Perhaps the main reason Amazon stock – after hitting a record high of $ 3531.45 in early September – hasn't done much for shareholders since then. They closed at 3,206,20 Friday, up about 6% over the past three months. The cloud computing segment can still crush expectations. Amazon is the world's largest cloud infrastructure provider, with Amazon Web Services (AWS) providing the bulk of the.
generates. Because AWS is a high-margin company, it provides Amazon with cash to expand its business strategies, including aggressive promotions and cheap hardware devices. The division produced 29% growth in both Q3 and Q2, up from 33% in Q1 as companies continue to shift their data to Amazon servers.
However, rising costs should not relate to the long term of the company. term investors. Founder and CEO Jeff Bezos has a good track record of providing conservative guidance and then exceeding expectations.
That's why the majority of analysts looking at the stock have a buy rating, with the 12-month price target of $ 3,831.77, a potential jump of 16% from the current level .
Bottom Line
Even after gaining more than 65% in the last 12 months, Amazon remains a solid choice for long-term investors. The factors that fueled the 2020 rally continue to play a role, given the still low e-commerce penetration, increased handling capacity and the shift to cloud computing.
