During the past month's extreme market volatility, Amazon has been a relative safe haven.
And that tells you everything you need to know about the company's critical role in society.
Even with the economy almost certainly headed into recession and unemployment projected to spike, consumers are flocking to Amazon to buy essential health and household products while getting groceries delivered through services like Amazon Fresh. Last week, Amazon said that it's hiring an additional 100,000 full-time and part-time employees in the U.S. for warehouse and delivery jobs to meet the surge in demand from online shopping amid the coronavirus outbreak, and is increasing pay and offering more lenient sick leave policies to keep workers engaged.
Additionally, businesses forced into remote work situations are more reliant than ever on the tech infrastructure provided by Amazon Web Services. Suddenly popular work-from-home apps like Slack and Zoom rely at least partially on AWS to keep their services running.
As central as Apple's iPhones, Microsoft's productivity tools and Facebook and Google's various apps have become to our way of life, Amazon's ability to provide almost anything consumers or businesses need on a moment's notice is unmatched by its fellow tech leaders.
Since the U.S. market peaked on Feb. 19, Amazon's stock price has dropped 11%. In any other five-week period, losing over $100 billion in value in such short order would be viewed as catastrophic. But over that same period, the S&P 500 has plunged 28%, and the each of the other U.S. tech giants have dropped at least 20%.
"As more and more businesses shutter or move to online operations, and more and more consumers shelter in their homes, we expect traffic on the Amazon site to increase," wrote Jim Kelleher, an analyst at Argus, in a report on Monday. He has the equivalent of a hold rating on the stock. "Certain counties with COVID-19 clusters are implementing stay-at-home policies with varying degrees of stringency. Even in communities with low or no cases, consumers are prudently minimizing interactions, including trips to retail stores."
U.S. stocks bounced back on Tuesday, with the Dow Jones Industrial Average staging its biggest rally since 1933, as investors await a stimulus bill from lawmakers. But the blue chip index remains almost 30% off its high.
Along with Amazon, Walmart also announced mass hiring plans of hourly employees for stores and warehouses. In a report on March 19, KeyBanc Capital Markets analysts wrote that for both Amazon Walmart, "recent news and our ongoing channel checks bode well for near-term earnings."