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Amazon Soars on Record 4th-Quarter Revenue

GuruFocus.com
·3 min read

- By James Li

Shares of Amazon.com Inc. (NASDAQ:AMZN) increased over 1% on the back of reporting record revenue for the fourth quarter of 2020. The company also announced that CEO Jeff Bezos is transitioning into an executive chairman role during the third quarter of this year.

For the quarter ending December 2020, the Seattle-based company reported net income of $7.2 billion, or $14.09 in earnings per share, compared with net income of $3.9 billion, or $6.47 in earnings per share, in the prior-year quarter.


Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

Company announces CEO transition amid record quarterly revenue

Amazon announced in conjunction with its earnings release that founder and CEO Jeff Bezos will transition into the role of executive chairman during the third quarter of 2021 while Amazon Web Services CEO Andy Jassy will take over as CEO of Amazon.

Bezos said in the company's press release that Amazon pioneered a wide range of inventions, including customer reviews, one-click shopping, personalized recommendations and innovative products like Kindle and Alexa. However, the founder of Amazon added that things start become normal and that "people yawn."

"That yawn is the greatest complement an inventor can achieve," Bezos said.

He then concluded that Amazon's financial results illustrate the company's "long-run cumulative results of invention" and that "it is the optimal time" to step down as CEO now that Amazon is "at its most inventive ever."

Revenue of $125.6 billion during the fourth quarter of 2020 represented a 44% increase from fourth-quarter 2019 revenue of $87.4 billion. The company said that the 2020 holiday season saw strong sales growth among small and medium-sized independent businesses selling on its platform, with worldwide sales increasing over 50% compared to the same period in the previous year. Sellers on Amazon delivered over 1 billion products, ranging from toys and electronics to fashion and home goods, around the globe.

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

Company updates on HQ2 plan

Amazon unveiled earlier on Tuesday a proposed design for its second headquarter location in Arlington, Virginia. The "double helix" building concept continues the company's "Spheres" building in Seattle, a building in which the company said employees can "work or unwind while immersed in nature." Amazon added in its news release that the helix building enables employees and visitors to walk on two paths of landscaped terrain based on the Blue Ridge Mountains.

Stock rises in aftermarket trading

Shares of Amazon.com traded at an aftermarket-high of $3,428, up approximately 1.42% from the closing price of $3,380. The stock is modestly overvalued based on Tuesday's price-to-GF Value ratio of 1.14.

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

GuruFocus ranks Amazon's profitability 8 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and an operating margin that is near a 10-year high and outperforms over 66% of global competitors.

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

Gurus with large holdings in Amazon.com include Ken Fisher (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) also has a holding in Amazon.com.

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

According to the Performance section, a new section of the stock summary page, Amazon returned an annualized 42.21% per year over the past five years, compared to competitor Alibaba Group Holding Ltd.'s (NYSE:BABA) annualized return of 31.61% per year over the same period.

Amazon Soars on Record 4th-Quarter Revenue
Amazon Soars on Record 4th-Quarter Revenue

Disclosure: No positions.

Read more here:

  • Yacktman Asset Management's Top 4 Buys of the 4th Quarter

  • US Markets Begin February Significantly Overvalued

  • Honeywell Slips Despite 4th-Quarter Revenue Beat



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This article first appeared on GuruFocus.