The only thing Amazon seems to be making this days is profit and the consistent growth in its market value and size. Amazon is the largest retail giant in the world and has been offering lower prices on arrays of consumer product in every industry you can think of for a long time. In fact, Amazon is regarded as the world’s online shopping mall. Amazon has developed hundreds of strategies to keep its customers happy and continues to innovate on keeping a tight hold on its U.S market share of about 49%. Harris poll on corporate reputation, Amazon ranked number 2 this year and has remained in the top 10 for the 10th year in a row. Excerpt from e-commerce platforms revealed Amazon had a market capitalization in excess of $268 billion dollars as of June 2018.
According to Forbes, the ever increasing market value of Amazon is on a consistent steady rise as it just recently reached the trillion dollar mark being the only company to have achieved that after Apple. All of these facts and realities can somewhat predict how successful the shares of Amazon can be but it is noteworthy to look at other factors that might play out to determine the performance of the stock. The fact that a company is on an ever positive trend is a good indication of what its stock will look like on the security market but that alone is not a determinant of the success of its stock. Several other factors also come to play in the determination of stock performance and keeping abreast of information on Amazon share prices.
With the recent successes the e-commerce giant has recorded in terms of its increased capitalization and its continued dominance in the e-commerce world. There are certainly advantages to buying its shares. The value of Amazon’s share has steadily been on the increase for the past 10 years. According to CNBC calculations an investment of $1000 in year 2009 would be worth more than $23,600 as of February 2019. In January 2019, Amazon briefly surpassed Microsoft to become the largest publicly traded company in the U.S by market cap when it hit a valuation of $789 billion.
Analysts have forecasted that Amazon’s earning per share will rise to $44.30 in 2020 from $20.10 in 2018. Due to the fact that Amazon keeps creating new business mix, new private label brands and dominating the retail segment of a very wide market segment, its profit growth has become a major indicator of the success of the business and in turn be seen as an important yard stick for measuring the value of the company. An expert analyst Anthony DiClemente in a report noted that “as such, we remain bullish on Amazon at least in part because the company’s profit is expected to grow about 400 basis point faster than revenue over the next three years.”
However, another report from CNBC suggests that so far, 2019 has been a mediocre year for amazon. It recorded that the e-commerce giant is up about 5 percent this year but has underperformed the markets 7 percent gain and investors are starting to have fears about the company’s spending but this report might be negligible because it hasn’t affected the positive surge and bullish forecast analysts keep giving Amazon stocks.
Another factor is Amazon’s business. The successes of its e-commerce third party market place which accounts for greater than 50 percent of product units sold. The expansion of its private labels is also a big reason for huge revenue and its consequent excellent performance in the stock market. From information gathered, Amazon has about 138 private labels. Amazon does well in positioning itself to meet the demands of its vast customer sections by leveraging on the data it generates from its everyday business transaction. Amazon is able to know exactly what customers want and consequently innovates to meet their demands. A quote on the Street by an investment research firm, projects that Amazon private label will generate $25 billion in sales by 2022. Others profit generating Amazon services include Alexa, Amazon prime, cloud storage etc.
According to analysts “if you are looking for stocks with good return, Amazon.com inc can be a profitable investment option. Based on their forecast, a long term increase is expected. Say with a 5-year investment, the revenue is expected to grow to 152.51% and a $100 investment may be up to $2525.51 in 2024.
One important thing to note is the recent resurfacing of antitrust issues by the congress and it would be a key issue if it ever becomes a major debate in Congress.
There is no doubt that the NASDAQ: AMZN has been doing excellently well and forecast analysts have been very bullish about it this year despite a slight slump in its stock like many of its large-cap tech peers in the fall of 2018. Many investors believes that Amazon will sustain its dominance in the online retail while it keeps its improving innovation in other area of its businesses.