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Why Amazon Stock Just Popped 5%

By Rich Smith - Apr 13, 2020 at 2:39PM

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The company plans to gradually restore its ability to ship nonessential merchandise.

What happened

On a Monday when most stocks appear to be in the red, with the S&P 500 down 1.5% at 2 p.m., one stock is glowing a decidedly optimistic shade of green: Shares of Amazon.com (AMZN -0.15%) were up a healthy 5.3%.

Network of conveyor belts carrying open empty boxes

Amazon warehouses will soon be ready to accept more third-party merchandise. Image source: Getty Images.

So what

The Wall Street Journal just reported that Amazon is ready to resume allowing third-party sellers to sell nonessential items on its website by sending those items to its warehouses for delivery to Amazon customers.  

Things should start getting back to normal at Amazon "later this week," said a company spokesperson. "Products will be limited by quantity to enable us to continue prioritizing products and protecting employees," initially at least, "while also ensuring most selling partners can ship goods into our facilities."

Now what

It appears that Amazon's surge in hiring, bringing on 100,000 more workers to meet the increased demand for its services in the midst of the pandemic, is starting to bear fruit. As the company moves to hire a further 75,000 workers (just announced), things should get back closer and closer to normal for the e-commerce giant. Considering that, before this crisis at least, Amazon was deriving the majority of its sales revenue from third-party vendors on its site, the sooner it can get back to doing that, the better it should be for the company's income statement.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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