Amazon.com, Inc. (NASDAQ: AMZN) has come a long way since 1995 when the company started out as an online bookstore.
Today Amazon has a market cap of US$1.5 trillion (AU$2.1 trillion). And founder and CEO Jeff Bezos counts among the richest people on Earth.
But judging by the company's second quarter results — released yesterday (overnight Aussie time) — both Bezos and the Amazon share price could have much more growth ahead.
The company reported a 42% increase in operating cash flow, to US$51.2 billion. That's compared to the previous 12 months ending 30 June.
Net sales grew to US$88.9 billion, up 40% from its second quarter in 2019. And according to the company's third quarter guidance, net sales are forecast to grow from 24% to 33% compared to the third quarter in 2019.
Net income also rose to US$5.2 billion. That works out to earnings per share (EPS) of US$10.30, compared to US$5.22 EPS in the same quarter of 2019.
Additionally, the COVID-19 lockdowns saw online grocery sales triple, while Amazon increased its grocery delivery capacity by 160%.
A word from Amazon's founder and CEO, Jeff Bezos
This was another highly unusual quarter… As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand — purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners. We've created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon's first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.
How did investors in Amazon stock react?
Amazon trades on the Nasdaq Composite (INDEXNASDAQ: .IXIC) at US$3,051.88 per share. The Amazon share price closed up 0.60% on Thursday. The share price is up 6.5% in after-hours trading.
While the company trades at a nosebleed price to earnings (P/E) ratio of 145 times, Amazon's share price has been trending higher since 1997, when you could have picked up the stock for US$1.73 per share! And with the company forecasting net sales to grow from 24% to 33% in the next quarter, compared to the same quarter in 2019, I believe Amazon is well-placed to see its shares run higher from here.
