Amazon To Pay $500M In Holiday Bonuses; Street Is Bullish

Amazon.com Inc. said that it will spend about $500 million on special bonuses for its US front-line employees working during the upcoming holiday season. The online retail giant said that it will pay bonuses of $300 for its full-time workers and $150 for part-timers, if they are employed for the entire month of December.

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Amazon’s (AMZN) logistics chief Dave Clark said in a corporate blog post that “Combined with other holiday pay incentives, in this quarter alone we are investing over $750 million in additional pay for our front-line hourly workforce, on top of our industry-leading $15 national minimum wage. This brings our total spent on special bonuses and incentives for our teams globally to over $2.5 billion in 2020, including a $500 million thank you bonus earlier this year.”

Earlier, Amazon reported better-than-expected 3Q results. Earnings of $12.4 surpassed the Street’s estimates of $7.4 per share. Revenues of $96.2 billion also came ahead of analysts’ expectations of $92.7 billion. However, the company forecasted 4Q operating income to fall between $1 billion and $4.5 billion, due to COVID-19 related costs of about $4 billion. Amazon also anticipated 4Q sales in the range of between $112 billion and $121 billion, representing growth of 28% to 38% year-over-year. (See AMZN stock analysis on TipRanks)

On Nov. 18, Needham analyst Laura Martin maintained a Buy rating and a price target of $3,700 (16.2% upside potential). She said that “Following the favorable efficacy news of Pfizer and Moderna’s Covid-19 vaccines, we surveyed ~330 consumers on shopping habits and upcoming plans,” and she noted that COVID-19 vaccine will not disrupt growing e-commerce loyalty toward Amazon. She added that “AMZN has several hidden value multipliers that suggest it is worth between $4,500 and $5,000/share.”

Like Martin, the rest of the Street has a firmly bullish outlook on the stock. The Strong Buy analyst consensus is based on 36 Buys and 1 Hold. The average price target stands at $3,818.46 and implies upside potential of about 19.9% to current levels. Shares have risen by 72.4% year-to-date.