[Click eStock] "Amazon Remains Attractive for Long-Term Investment Despite Unexpected Costs"

[Asia Economy Reporter Minji Lee] Eugene Investment & Securities stated on the 6th that although there is a possibility of Amazon turning to a loss in the second quarter due to unexpected expenses, the company is considered to have high investment attractiveness in the long term due to an increase in new customers.

Amazon's revenue in the first quarter was $75.5 billion, a 26% increase compared to the same period last year. Operating profit was $4 billion, a 9% decrease compared to the same period last year. Researcher Younghoon Joo of Eugene Investment & Securities said, "Sales increased due to a surge in online purchase demand caused by COVID-19, but costs rose significantly, resulting in profitability being lower than expected."

Revenue in the North American retail business segment increased by about 29% compared to the same period last year, surpassing last year's growth rate of 20.8%. Although the impact of COVID-19 in the U.S. began to intensify from March, online purchase demand, mainly for groceries, exploded, leading to a significant increase in sales. In response, Amazon announced plans to hire 75,000 new employees to address delivery delays occurring within its logistics chain.

However, it is believed that costs also increased significantly due to increased employment and investments related to worker safety in response to COVID-19. Researcher Younghoon Joo explained, "In the upcoming second quarter, expenses of $400 million or more are expected," adding, "As a result, the second-quarter operating profit guidance has been revised downward to approximately -$1.5 billion to $1.5 billion."

Amazon's stock price has fallen by about 7.6% since the possibility of a second-quarter loss was raised. This is interpreted as reflecting investors' disappointment who expected high sales growth to lead to profit increases.

However, in the long term, profits are expected to increase due to the influx of new customers. Researcher Younghoon Joo emphasized, "COVID-19 has brought numerous new customers to the food category, which had been the only category where success was not achieved," and added, "Even after COVID-19 ends, the likelihood of consumers who have experienced food delivery services switching away is low, making it highly attractive from a long-term investment perspective."

This content was produced with the assistance of AI translation services.