Amazon said it would spend all $4 billion of its Q2 profits on COVID-19 responses. Wall Street still expects a profitable quarter.
Wall Street expects Amazon to report a profitable quarter, even though the company warned it would spend all of the $4 billion in expected operating profit in COVID-19-related initiatives.
Despite all that spending, which included a pay raise for warehouse workers and investments in a new testing lab, Wall Street still expects Amazon to report a profitable quarter — $1.2 billion in operating profits — backed by strong lockdown-driven sales and accelerating growth in high-margin businesses.
"Simply put, COVID-19, in our view, has injected Amazon with a growth hormone, in ways that rolling out one-day Prime shipping was not able to," D.A. Davidson's Tom Forte wrote in a note last week. On top of that, investors believe Amazon's higher margin businesses, like advertising, saw continued growth during the quarter, helping expand its profitability and balance the $4 billion in planned COVID-19 related expenses.
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