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Amazon To Pay $500M In Holiday Bonuses; Street Is Bullish

Amazon.com Inc. said that it will spend about $500 million on special bonuses for its US front-line employees working during the upcoming holiday season. The online retail giant said that it will pay bonuses of $300 for its full-time workers and $150 for part-timers, if they are employed for the entire month of December.

Amazon’s (AMZN) logistics chief Dave Clark said in a corporate blog post that “Combined with other holiday pay incentives, in this quarter alone we are investing over $750 million in additional pay for our front-line hourly workforce, on top of our industry-leading $15 national minimum wage. This brings our total spent on special bonuses and incentives for our teams globally to over $2.5 billion in 2020, including a $500 million thank you bonus earlier this year.”

Earlier, Amazon reported better-than-expected 3Q results. Earnings of $12.4 surpassed the Street’s estimates of $7.4 per share. Revenues of $96.2 billion also came ahead of analysts’ expectations of $92.7 billion. However, the company forecasted 4Q operating income to fall between $1 billion and $4.5 billion, due to COVID-19 related costs of about $4 billion. Amazon also anticipated 4Q sales in the range of between $112 billion and $121 billion, representing growth of 28% to 38% year-over-year. (See AMZN stock analysis on TipRanks)

On Nov. 18, Needham analyst Laura Martin maintained a Buy rating and a price target of $3,700 (16.2% upside potential). She said that “Following the favorable efficacy news of Pfizer and Moderna’s Covid-19 vaccines, we surveyed ~330 consumers on shopping habits and upcoming plans,” and she noted that COVID-19 vaccine will not disrupt growing e-commerce loyalty toward Amazon. She added that “AMZN has several hidden value multipliers that suggest it is worth between $4,500 and $5,000/share.”

Like Martin, the rest of the Street has a firmly bullish outlook on the stock. The Strong Buy analyst consensus is based on 36 Buys and 1 Hold. The average price target stands at $3,818.46 and implies upside potential of about 19.9% to current levels. Shares have risen by 72.4% year-to-date.

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Amit Singh
Amit Singh jumped into the world of stock analysis and investing after completing his Post Graduate Diploma in Finance in 2009. Before joining TipRanks in 2020, he worked as an equity research analyst for eight years. With a keen eye for identifying strategic investment opportunities, his work entails evaluating stocks, building financial models, writing company-specific research reports, and identifying the overall financial worth of companies in the consumer staples and technology sectors. In 2017, Amit found a way to combine his expertise in evaluating companies with his passion for writing. He has also worked with the financial research firm Market Realist.