Amazon Posts Record Revenues in Q3

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Revenues & Earnings Higher

US tech giant Amazon came out with a blistering set of Q3 earnings this week. Following on from the solid earnings beat in Q2, Amazon posted third-quarter earnings per share of $12.37, firmly beating expectations for a $7.41 EPS. This marks a 37% increase in earnings year on year for Amazon.

Revenues also rose firmly with the company posting record net-revenues of $96.15 billion. This comfortably beat expectations for $92.7 billion in revenues.

Finally, net income jumped to $6.3 billion over the quarter, marking a solid increase on the $2.1 billion posted in Q3 2019.

Strong Q4 Guidance

Looking ahead to the final quarter of the year, amazon forecast sales of between $112 billion – $121 billion. Sales in this range would mark a 28% – 38% increase on sales in the same period a year prior and would be above the $112.3 billion Wall Street is looking for.

Increased COVID Costs

The company is also forecasting operating income of $1 billion – $4.5 billion with around $4 billion in costs attached to COVID-19 measures.

Last quarter, Amazon said it would spend around $2 billion on COVID-linked measures. Commenting on this, Amazon CFO Brian Olsavsky said that the majority of these costs were linked to “continued productivity headwinds” in warehouses as a result of enforcing COVID safety measures such as extended breaks for cleaning and social distancing guidelines to ensure “our people are safe and distanced”.

Olsavsky went on to say:

“There’s productivity drags for things like new hire ramps, social distancing, any break periods, things that we can quantify. This is a change in our process that has hurt productivity.”

Holiday Demand Expected

Amazon continues to note a surge in demand as more and more people opt to shop online rather than going out.

Looking ahead to the holiday season, Amazon is expecting this trend to continue with Amazon CEO Jeff Bezos saying:

“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.”

Amazon Held Up By Rising Trend Line

Shares in Amazon continue to be underpinned by the rising trend line from earlier 2020 lows. While above here, the focus is on continued upside.

However, the 3332.07 – 3495.98 region continues to offer firm support in the near term. The main downside levels to note are the 3103.51 level ahead of deeper support down at 2883.33 – 2793.58.

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