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Amazon Plans to Spend $4 Billion Fighting COVID-19 in the Second Quarter

By Demitri Kalogeropoulos – Apr 30, 2020 at 6:21PM

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The pandemic is generating higher sales, along with plenty of extra costs.

The COVID-19 pandemic has spurred surging demand for Amazon's (AMZN -1.22%) services, including product sales, online entertainment, and enterprise cloud platforms. But it's also generating huge costs.

The company announced on Thursday that sales jumped 26% in the first quarter, equating to an extra $16 billion of revenue. "The current crisis is demonstrating the adaptability and durability of Amazon's business as never before," CEO Jeff Bezos said in a press release, "but it's also the hardest time we've ever faced."

A man delivering boxes to a customer.

Image source: Getty Images.

Bezos went on to describe a massive corporate undertaking aimed at keeping its customers and employees safe through the pandemic. This includes the purchasing of thermal cameras, thermometers, and 100 million face masks. Amazon is building its own testing capabilities to detect the virus, has hired 175,000 additional workers in the last two months, and has raised most hourly wages.

The combined cost is likely to more than wipe out the entire total operating profit the company was expecting to generate in the second quarter. "If you're a shareholder in Amazon you might want to take a seat," Bezos explained, before noting the $4 billion projected cost of COVID-19 measures in Q2.

As for revenue, Amazon's short-term prediction envisions more head-turning gains ahead, with second-quarter sales likely to rise by between 18% and 28% to as high as $81 billion.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Demitrios Kalogeropoulos owns shares of Amazon. 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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