Amazon One-Day Shipping Investments Could Impact Profits

As investors monitor the impact of Amazon’s one-day delivery investments on profit, the eCommerce retailer is set to report its Q4 earnings. The eCommerce retailer said in its last earnings report it would spend $1.5 billion during the holidays to grow its one-day delivery offering and make it standard for members of its Prime offering, CNBC reported.

In its Q3 results, the eCommerce giant provided dissatisfying revenue guidance, which could have set expectations for a possibly lackluster holiday shopping season. Amazon, however, assuaged those worries in December when it noted that shoppers bought items at “record” levels.

Wedbush Securities Analyst Michael Pachter said in a report that the eCommerce retailer’s bold move into one-day delivery likely offered a “nice boost to (near) last-minute purchases ahead of Christmas.” Pachter recommending purchasing shares. Amazon, for its part, is forecast to post a decline in Q4 profit from $6.04 per share a year earlier to $4.03 per share.

Analysts also expect Amazon to register sales growth from $72.4 billion to $86 billion. Revenue has risen in each of the last four quarters 17 percent to 24 percent. Rising costs have put a burden on the retailer’s share price recently. Shares have been higher by only 17 percent in the past year.

The news comes after it was reported that Amazon may rejoin the so-called trillion-dollar club. The group is a collection of companies that have a market value greater than or equal to $1 trillion and includes tech firms Apple and Microsoft as well as Alphabet.

Amazon first became a part of the trillion-dollar club in September 2018. But it has lost a portion of its value as of that time due to heavy investments in one-day delivery and last mile, Amazon Prime Video streaming content and grocery delivery.

Morgan Stanley Equity Analyst Brian Nowak said per a past report, “Amazon’s high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest.”