According to CNBC host and ActionAlertPlus portfolio manager Jim Cramer, those who are uncomfortable with the firm’s strategy of using its profits to fight the COVID-19 pandemic are now selling AMZN stock.
Cramer also pointed out that Amazon Web Services (AWS), the company’s leading department when it comes to profit, slowed down “rather dramatically” and questioned whether the firm lost market share to Google or Microsoft.
Jim Cramer added that “Amazon is like a country” that is looking to make sure “everybody is fine” and that as it can’t have its own taxation system, it decided to forego profits to make sure its response to the pandemic is the correct one.
According to a report by The Street, AMZN shares underwent pullback in response to the company’s quarterly earnings of $5.01 per share, missing the expectation of $6.25. Revenue for the quarter was $75.5 billion, exceeding the quarterly prediction of $73.61 billion.
In addition to the missed earnings milestone, investors were uncomfortable with Amazon’s plan to spend $4 billion, or more, on COVID-19 related expenses, potentially wiping out Q2 profits.
Amazon CEO Jeff Bezos said in a press release,
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.
Bezos emphasized the impact of Amazon’s spending during the earnings call, telling investors, “You may want to take a seat.”
Safety expenses include 100 million face masks to be worn by employees and drivers, in addition to 31,000 thermometers and 1,000 thermal cameras for use in Amazon’s Whole Foods Market stores.
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