Amazon will tell the world this week just how much money it has made from the “unprecedented demand shift” to its site from millions of people under lockdown conditions around the world.
The retailer, which is run by the world’s richest man, Jeff Bezos, will release its sales and profit figures for the first three months of the year (including the first few weeks of the lockdown in the UK and much of Europe and the US) on Thursday.
Analysts forecast Amazon to report first-quarter revenues of $73bn (£58bn). That would be up nearly 22% on the same quarter last year, and works out as sales of $10,000 every second, day and night.
Sales at Amazon had already been increasing, but analysts at Bank of America say the lockdown has fuelled an “unprecedented demand shift” to online sellers.
While most businesses have been hit hard by the impact of the pandemic and the looming recession, shares in Amazon have risen to a record high as hundreds of millions of people stuck indoors turn to the delivery giant to keep them fed and entertained.
Josh Brown, chief executive of Ritholtz Wealth Management, said: “Amazon became a utility in this crisis – defensive, reliable, indispensable.”
Analysts at the US investment bank Cowen likened the impact of the lockdown to the Black Friday shopping frenzy in November, or Amazon’s own Prime Day sale in July. “Amazon has seen an ‘enormous increase in demand’ as shoppers are forced to stay home, essentially creating an extended Prime Day/Black Friday type of situation,” they wrote.
Amazon’s share price is up 42% in the past month, hitting a record high above $2,400 last week. One month ago they were changing hands at $1,689.
At these prices the business is valued at $1.2tn, making it the third biggest US company after Microsoft ($1.35tn) and Apple ($1.25tn).
The soaring share price has added to Bezos’s already massive fortune. The man who started Amazon in his garage in 1994 and still owns 11% of the company’s shares saw his paper fortune swell by $13bn this week alone to $145bn. He is now worth $40bn more than the second-richest person, Bill Gates, and holds almost double the wealth of third-placed Warren Buffett.
Bezos, who has donated $100m (£80m) to the food bank charity Feeding America, has told staff he is concentrating on developing testing that should help Amazon staff keep working. In his annual letter to shareholders on Thursday, Bezos said Amazon had assembled a team of scientists and software engineers to build internal testing capacity, and hoped to build its own testing laboratory soon.
“Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running. For this to work, we as a society would need vastly more testing capacity than is currently available,” he said.
Amazon is also rapidly hiring staff to keep up with demand from shoppers. The company said on Monday it was hiring an extra 75,000 staff to help it to process the increase in orders. Those new recruits come on top of 100,000 taken on already since the coronavirus crisis hit western economies last month. The additional workers will take Amazon’s global workforce to nearly 1 million.
Joshua Warner, an analyst at the London-based online trading firm IG Index, said: “Amazon shines from all angles during the coronavirus crisis. Ultimately, Amazon will remain one of the most important businesses during this crisis, providing key services including food, entertainment and shopping at a time when consumers have fewer retailers to choose from.
“Amazon stock has rocketed to a new record high,” he added. “Of all the firms that might stand to benefit, Amazon is a clear winner.”
