Amazon (NASDAQ:AMZN) stock was under pressure in early trading Friday after the company gave wide ranging guidance for the fourth quarter and said it expects to spend $4 billion U.S. on Covid-19 safety measures in the final months of 2020.
The online retailer said in its latest earnings report that operating income for the final three months of the year will be between $1 billion U.S. and $4.5 billion U.S. That incorporates roughly $4 billion of costs tied to Covid-19 for measures such as testing, cleaning, extending employee breaks and social distancing measures.
That $3.5-billion U.S. difference between the high and low end of the guidance range leaves a lot for investors to consider. Last year, Amazon baked a $1.7-billion U.S. gap into its fourth-quarter operating profit forecast. In 2018, the difference was $1.5 billion U.S.
Amazon Chief Financial Officer Brian Olsavsky said on an earnings call with analysts that every fourth quarter carries uncertainties because of the holidays and volatile weather patterns. It is by far the biggest period of the year for the company in terms of revenue, and this year is expected to be Amazon’s first quarter ever to surpass $100 billion U.S. in sales.
But the end of 2020 is particularly unpredictable. Prime Day, Amazon’s annual mega-shopping event, was pushed back from July to October this year as the company adjusted to the strains of the global pandemic.
Amazon shares fell almost 2% in pre-market trading Friday even though the company reported better-than-expected revenue and profit.
Amazon said sales in the fourth quarter will be between $112 billion U.S. and $121 billion U.S., compared to analysts’ average estimate of $112.3 billion U.S. Analysts were expecting operating profit of $5.8 billion U.S.
