Amazon.com, Inc. (NASDAQ: AMZN) stock fell over 3.8% on 30th October, 2020 (As of 11:00 am GMT-4; Source: Google finance) post third quarter of 2020 performance. Amazon’s physical stores segment, which includes Whole Foods, saw a 10% decline in sales from the year-earlier period.
after the company’s profit almost tripled to $6.3 billion, driven by strong online sales as well as digital advertising and growth in its lucrative cloud computing arm. Amazon’s burgeoning advertising business grew sharply, with sales up 51% from a year earlier to $5.4 billion in the quarter. Further, Amazon Web Services (AWS), the company’s cloud-computing operation and its main profit center, delivered the sales of $11.6 billion in the third quarter ended September 30, growing 29% from a year earlier. Operating income for AWS, which rents computing power to companies and the government, grew 56% to $3.5 billion.
Moreover, for the third quarter of 2020, the company reported 37% rise in the net sales to $96.1 billion in the third quarter, compared with $70.0 billion in third quarter 2019. Operating income has almost doubled to $6.2 billion in the third quarter, compared with operating income of $3.2 billion in third quarter 2019. The company has generated 56% increase in the operating cash flow to $55.3 billion for the trailing twelve months, compared with $35.3 billion for the trailing twelve months ended September 30, 2019. The company’s free cash flow has increased to $29.5 billion for the trailing twelve months, compared with $23.5 billion for the trailing twelve months ended September 30, 2019.
Amazon forecast operating profit to be between $1.0 billion and $4.5 billion, short of $5.8 billion analysts were looking for, according to research firm FactSet. For the fourth quarter, Amazon expects net sales to be in the range of $112 billion to $121 billion. That would mark the company’s first over $100 billion and follows a third-quarter revenue beat. For the fourth quarter, operating income is expected to be in the range of $1.0 billion and $4.5 billion, compared with $3.9 billion in fourth quarter 2019. Further, the company plans to add 100,000 seasonal workers in the U.S. and Canada heading into the Thanksgiving and Christmas holidays ahead of an expected increase in online orders.
Meanwhile, the company reported that customers in its loyalty club Prime were shopping more often, renewing their membership at higher rates and, internationally, turning to Amazon much more for video entertainment. The merchants have also expanded their budgets for advertising on Amazon in the third quarter versus a contraction during the pandemic’s spring peak.