Amazon: one of the few companies to benefit from the crisis in 2020

Amazon: one of the few companies to benefit from the crisis in 2020

26 January 2021Reading time: 3 minutes

The current crisis harmed many companies. Amazon is not one of them. The company was able to increase significantly its revenue and its net income and is one of the big winner of the e-commerce expansion in 2020.   

 

E-commerce’s expansion continues

The last year was a catastrophic year for the classic retail sector. Due to the pandemic and to the lockdown measures, which resulted of it, the revenues of the classic retail sector significantly decreased in Europe in 2020. The decrease particularly affected the clothing sector with an almost 80% decrease in sales between February and April 2020. The book sector and the electronic goods sector were also badly affected by the crisis with a 40% and a 33% decrease in sales for the same period. Only food and pharmaceutical goods sectors were spared by the crisis.
With the easing of the COVID-19 related restrictions, the classic retail sector partly recovered and, according to Eurostat, the sales levels reached or in some cases even exceeded the 2019 levels. After mid-October 2020, due to the second wave of the pandemic, many European countries implemented again restrictions, which led to a decrease in sales in November and December 2020. The same pattern can also be observed in the USA.
On the other hand, e-commerce seems to have benefited from the crisis. Between February and April 2020 the online sales increase by about 20%. This growth then slowed down between April and November with a 7.1% increase. End of 2020, e-commerce in Europe was worth EUR 717 billion meaning a 12.7% growth compared to 2019. Worldwide, e-commerce revenues grew from USD 1 939 billion in 2019 to USD 2 438 billion in 2020 (+25% year on year).

Amazon: a clear winner of the crisis

Even though the figures for the fourth quarter of 2020 have not been released yet, 2020 is expected to be one of the best or even the best year for Amazon since the creation of the company. In the second and third quarter, Amazon clearly benefited from the pandemic: facing store closures, customers turned to the e-commerce giant.
Compared to the third quarter of 2019, the company’s revenue grew by 37.4% in the third quarter of 2020 reaching USD 96.15 billion. The company was not only able to increase its revenue, but also its net income. In the second quarter, its net income reached USD 5.2 billion (compared to USD 2.6 billion for Q2 2019) and in the third quarter, it reached USD 6.3 billion (compared to USD 2.1 billion in Q3 2019). Only the first quarter was not as good as in 2019 (USD 2.5 billion in Q1 2020 compared to USD 3.6 billion in Q1 2019). 
Will this trend continue in 2021? Would a possible end of the COVID crisis mean lower sales for Amazon? For now, analysts are very optimistic for Amazon. Out of 49 analysts, 46 recommend buying the stock and 3 recommend to hold the stock according to Bloomberg.  

Stock overview

On January 12th 2021, the Amazon stock closed at USD 3 120.83 compared to USD 1 891.30 on January 13th 2020. The stock price reached its 52-weeks low on March 16th 2020 when the stock traded at USD 1 626.03. It reached its 52-weeks high on September 2nd 2020 when the stock traded at USD 3 552.25.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

Don’t miss any investment idea. Subscribe now to the Vontobel newsletter!

Vontobel products on Amazon are tradable at DEGIRO.

Discover Vontobel’s product on our Website.

Important legal information:
This information does not constitute a financial analysis, but product advertisement. Thus it does not meet the legal requirements to ensure the impartiality of financial analysis and is not subject to trade prohibition before the publication of a financial analysis.
Fordetailed information, particularly regarding the structure and the risks associated with an investment in the derivative financial instruments, prospective investors should read the Base Prospectus, which is available together with the Final Terms and any supplement to the Base Prospectus in electronic form on the issuer’s website: http://beursproducten.vontobel.com. Additionally, the Base Prospectus, anysupplements to the Base Prospectus and the Final Terms are available inprinted form, free of charge, at the registered office of the issuer: Vontobel Europe AG, Bockenheimer Landstrasse 24, 60323
Frankfurt am Main, Germany.

Investors should consider the applicable selling restrictions.
Companies of the Vontobel group may directly or indirectly pay commissions in varying amounts to third parties (e.g. brokers) in connection with the public offer and the distribution of the derivative financial instruments. Further information is available upon request from your distribution partner. 

03/03/2021 04:12:00