Buying Amazon shares is one of the most popular decisions new traders in the stock market can make today. The appeal of trading in Amazon.com shares strengthens as the company ventures into new growth opportunities and breaks new profit records. With a market capitalisation of $1.6 trillion, Amazon.com Inc. is the world’s fourth-largest company after Apple Inc, Saudi Aramco, and Microsoft Corp.
Amazon.com Inc Overview
Amazon is a revolutionary giant of online stores that sells a wide range of products and services over the internet. Jeff Bezos founded the company on July 5, 1994, in Bellevue, Washington. Although the company started as an online platform for selling books, it later expanded into an e-commerce giant for selling video games, electronic devices, software, furniture, toys, jewellery, and food.
Amazon surpassed Walmart in 2015 as the top retailer in the US based on market capitalisation, according to Bloomberg. It later acquired Whole Foods Market in 2017 for $13.4 billion, which increased its growth rates as a retailer.
Amazon’s stock price for the first time surpassed $1000 on May 30, 2017. At the time, it was a substantial increase as the stock price was $18 after debuting in the US stock exchange in 1997. Presently, the current price of Amazon shares is $3,416, and the price target continues to experience a high growth, which is one of the reasons fuelling the growth of interest in Amazon shares.
Why Invest in Amazon Shares?
Amazon is a special share as it enjoys a steady trend, and the company is successful in multiple areas. Most users recognise Amazon as a company that deals with sales of consumer products and retail shopping services. However, the company is swiftly escalating into new grounds as it has recently gotten into the pharmaceutical industry.
For example, Amazon Web Services (AWS) offers the company an edge over its competitors because it generates an additional sale without overstretching expenditure. Amazon spearheaded this cloud service infrastructure and has continued to control the market ahead of other competitors, such as Microsoft. Here are the some of top reasons why traders choose Amazon:
- A lot of Growth Opportunities
As a modern tech giant company, Amazon is resilient and promises to utilise all the growth opportunities it encounters. The company’s venture into the pharmaceutical industry is an example of this.
- Amazon Advertising
Most Americans use Amazon to search for any product. The company plans to extend this area and ensure it’s one of its primary income sources. Income from ads will be one of Amazon’s substantial revenue sources in 2021.
- Venturing into Prescription Drugs
Statista values the pharmaceutical industry at $1.27 trillion as of the end of 2020. By getting into this industry, Amazon aims to provide up to 40% discount on brand medications and 80% on all generic drugs. These discounts mean that most companies will stay out of the business as it will be hard for them to match the prices.
- Amazon as a Service Platform
The company aims at injecting more resources in developing its service industry segment. Depending on the present essentials in the service industry, Amazon is undervalued. Amazon Inc is a leader, and that’s why it will be one of the top beneficiaries of the business growth in the next few years.
What Brian Olsavsky, Amazon’s CFO, says about the Company’s Relative Growth Go-slow from Q2 2020
During a call to CNBC reporters, Brian Olsavsky said: “Amazon consumers are healthy and safe and ordering from the company. The company is aware that plenty of mobility and vacations are inevitable. Last year, consumers stayed away from some items, which is understandable, and this made them perform other activities besides shopping. The company is adjusting its run rates.”
The company’s revenue increased yearly by 27% to $113.08 billion, which is a substantial decrease from Q2 2020, when the sales increased by 41%. “The pandemic lockdowns were to blame for the small growth slump”, says Brian Olsavsky.
Amazon Major Competitors Share Price
Tesla Inc. manufacturers, develops, designs, leases, and sells electric cars. Its current share price is $ 753.64.
As one of the leading digital streaming platforms, Netflix share price is $593.26.
Google is a global tech company whose shares retail at $2,824.32.
Facebook is the leading social media channel globally, and it offers its shares at $345.96.
Besides specialising in computer software, online services, and consumer electronics, Apple Inc provides shares at $146.83.
Microsoft Corp shares cost $299.56.
Are Amazon Shares Overvalued or Undervalued?
The room for further growth of Amazon share price exists as its current price is lower than the all-time high of $3,731.41, recorded on July 8, 2021. Overall, these shares are undervalued. Trading at $400,000 as of April 2021, Berkshire Hathaway is the most overvalued stock.
Amazon Shares: Buy or Sell?
Well, buying is the best investment because no reason exists for trading against this global eCommerce platform in 2021. The company’s invention indicates that it has incorporated new tweaks and services to survive the global Covid-19 pandemic.
Lately, Amazon settled on purchasing Metro-Goldwyn-Mayer (MGM), a movie studio for a total of $6.5 billion, according to the Wall Street Journal. By acquiring MGM, Amazon aims at directly competing with Disney and Netflix in the digital streaming industry. Should the company get additional market share, revenues and share price will undoubtedly rise.
Factors Affecting Amazon Share Price
Understanding the essential factors that affect Amazon share prices helps traders determine the best time to enter and exit trades. Here are valuable factors that affect Amazon’s stock price:
- State of eCommerce Business
eCommerce is Amazon’s crucial business. A thriving eCommerce business setup translates to Amazon growth. So, one should assess eCommerce trends to find the ideal time to buy or sell Amazon stocks.
- Investing in New Verticals
Amazon plans to get into the marijuana industry soon if States legalize the products, besides expressing interest in joining Tesla in manufacturing self-driving vehicles.
- Demand for New Amazon Services
Besides selling online products, Amazon has been venturing into new business opportunities, such as Amazon virtual health, Amazon Prime, and Amazon pharmacy. Amazon stock price increases with an increase in demand for these services.
How to Trade In Amazon
- Register at a good online broker.
- Open a brokerage account.
- Make deposits to the account.
- Sign in to the account, search for CFDs on Amazon shares, and open your positions.
- Assess trading position
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Should one Trade CFDs in Amazon Stock Now?
Amazon is a reasonable target if one wants to trade in a reliable company with the potential for positive returns. . Compared to other companies, Amazon sits on a considerable user base of returning customers, for many of which the eCommerce giant is the first-stop for any online buying journey. It’s hard to argue with the success of the company so far and with the new ventures planned, Amazon has potential for further expansion.
Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.
Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.