Unexpected profit for Amazon

Unexpected profit for Amazon

Amazon has unexpectedly managed to turn a 126 million dollar loss into a profit in its second quarter, while its turnover also rose 20 %. The results have caused the share price to soar on the stock market, instantly making Amazon more valuable than Walmart.

Worth more than Walmart

The online retailer had a 126 million dollar (115 million euro) loss last year, but managed to turn that around into a 92 million dollar (84 million euro) profit. Analysts had predicted a loss for this quarter, which makes it all the more surprising.

 

Turnover also grew more than expected, up 19.3 % to 23.18 billion dollars (21 billion euro). These positive results have had their impact on Amazon's share, which shot up 18 %. Amazon's total value is now 264 billion dollars (240 billion euro), which made it more valuable than Walmart, currently worth 234 billion dollars (215 billion euro).

 

Amazon's turnover grew some 20 % up until the final quarter of 2014, after which turnover growth slowed down to 15 %. That prompted the company to spend more in advertising and investments, which is clearly paying off.

 

Larger margins between cost and turnover

Amazon has now made a profit in eight of its latest twelve quarters, mainly thanks to larger margins between the growth in costs and turnover. In the past quarter, costs grew 17.4 % and turnover grew 19.9 %: the largest difference between both in more than three years.

 

Amazon predicts a third quarter turnover between 23.3 and 25.5 billion dollars (21 to 23 billion euro), while analysts now think it will reach a 23.9 billion dollar (22 billion euro) turnover. Last year, Amazon managed a 20.6 billion dollar turnover in the third quarter.

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