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Amazon Really Did Spend $4 Billion On Anti-Coronavirus Measures in Q2

By Anders Bylund – Aug 1, 2020 at 8:43AM

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Not only that, but the e-commerce veteran promised to invest another $2 billion in virus-fighting efforts in the next quarter.

E-commerce giant (AMZN -1.63%) delivered some eye-popping numbers in Thursday's second-quarter report.

Earnings nearly doubled year over year to $10.30 per share. Sales rose 40% to $88.9 billion. Wall Street was expecting a strong performance thanks to the ongoing COVID-19 pandemic, but the reported figures were still a huge surprise. Your average analyst would have settled for earnings near $1.46 per share on revenue of about $81.5 billion.

Here's the fun part. Remember how Amazon CEO Jeff Bezos promised to spend $4 billion on coronavirus-fighting efforts in the second quarter? That did indeed happen and those costs are included in the estimate-smashing profits mentioned above. And that's not all. The company will pour another $2 billion into COVID-19 mitigation efforts in the third quarter.

Where is all that money going?

Amazon isn't just throwing that money away in order to claim quick PR points. Here's a short and incomplete list of COVID-19 expenses from the second quarter:

  • $500 million of one-time "Thank You" bonuses to Amazon workers and contractors who put their own health on the line for the company in June.
  • 650,000 full-time and part-time Amazon and Whole Foods workers now have access to 10 days of free emergency care of children and adult family members.
  • The company added 175,000 new employees in the second quarter and intends to keep 125,000 of these temporary workers onboard in permanent, full-time positions.
  • More than 150 workflow processes in Amazon's shipping facilities had to be changed in order to comply with social-distancing guidelines.
A group of delivery workers delivers some packages while wearing face masks and protective clothing.

Image source: Getty Images.

What does it all mean for Amazon investors?

Amazon is taking its commitment to COVID-19 mitigation very seriously. The company could have nearly doubled its operating income in the second quarter by shrugging off Bezos' $4 billion coronavirus promise. That would have been a long-term disaster for Amazon's brand name, of course. In that light, the renewed promise to invest another $2 billion in anti-COVID measures in the next quarter is the bigger story.

Jeff Bezos famously runs Amazon as if each day is Day One of operations in a brand-new start-up business. That means not sitting on your laurels, not collecting massive reserves of cash profits, and reinvesting the windfall from unexpected business-boosting events like the COVID-19 pandemic right back into the company. Bezos always optimizes Amazon's business plan to maximize long-term growth.

The COVID-19 investment does that by protecting the company and its workers in a time of crisis, and the lessons learned here should help Amazon get a handle on future crises as well. And that's how Amazon continues to deliver double-digit growth even in normal quarterly reports as if it didn't have a $1.6 trillion market cap and $322 billion in trailing revenue.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund 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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