- Although sales were up, Amazon’s Q1 results offered a grim warning for the future.
- Jeff Bezos told shareholders to buckle up for a bumpy ride.
- The firm could book a loss next quarter as it shells out billions to protect workers from coronavirus.
Amazon’s (NASDAQ:AMZN) highly anticipated Q1 results hit the markets Thursday–and it wasn’t pretty. The e-commerce giant delivered an increase in sales as lockdown restrictions facilitated a massive bump in online shopping. But CEO Jeff Bezos warned investors that there’s pain ahead as the firm navigates the novel coronavirus crisis:
If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small
AMZN Stock Gets Punished
Investors had been expecting big things from Amazon because the firm is so well-positioned to thrive amid the Covid-19 crisis. While the rest of the stock market is still struggling to recoup losses from the March drop, AMZN stock is trading 13% higher than where it was back in February.
But Bezos’ grim warning in the firm’s Q1 results is about to dull the shine on Amazon stock.
The firm’s share price was down 5% in pre-market trading as investors finally began to accept reality: Coronavirus is a headwind that’s not going away anytime soon. No one, not even Amazon, can escape it.
As expected, sales were up 26% in the first quarter, and unit sales, which measure the total profit per item sold, rose a whopping 32%. But despite the rosy figures, Bezos struck a somber tone as he warned that Q2 would likely be a nightmare for shareholders.
Bezos said he estimates spending in Q2 to top $4 billion as the firm combats the spread of coronavirus:
Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, 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