Why Are Investors Interested In Amazon Stock
The chief reason why investors pay so much attention to Amazon is its compelling growth over the last decade and more. The firm, started by Jeff Bezos back in the 90s, has become almost unrecognisable from its humble beginnings, and investors want to take their position on where it might head next.
Amazons remarkable bull run must end at some point no company can grow forever. But the corporation has survived the dotcom bubble, 2008 crash, resignation of Jeff Bezos and more. So what will end the current rally?
Keep An Eye On Trends And Industry Conditions
But once again be aware that even if the companys financials look promising, theres no guarantee of a positive future performance.
One or more new and powerful competitors can emerge, the company may face legal proceedings or even political limitations in a major market.
Any of these events and more can hurt the companys stock going forward.
Regularly Review Your Investments Performance
Whether you invest in just one company or hundreds, its a good idea to review your investments performance on a regular schedule, whether thats monthly, quarterly or annually. That way, you can see how your account is doing and evaluate whether you need to make any adjustments.
To judge how your Amazon investment is performing, you can compare its performance to those of benchmark indexes, like the Nasdaq 100 or S& P 500. You might also track the financial data provided in its public filings to gauge how Amazon handles its finances over time.
Recommended Reading: Does Amazon Cloud Drive Automatically Sync
Results For 4th Quarter 2021
Amazon announced its results for the fourth quarter of 2021 on Feb. 3. Revenue grew 9%, to $137.4 billion, which fell just short of estimates from a Refinitiv analyst survey reported by CNBC. However, the company reported $5.80 adjusted earnings per share, which easily beat analysts estimates. The positive earnings news drove the stock up in after-hours trading.
Amazon got a significant boost from its $1.3 billion investment in the electric vehicle maker Rivian, which named Amazon its primary cloud provider and has a deal to make 100,000 vehicles for Amazon by 2030, according to CNBC. Rivian went public in November with a $66.5 billion valuation.
Amazons full-year revenue was $469.8 billion, a 22% increase from 2020, due in part to 40% annual growth in Amazon Web Services, a positive return on its investment in Rivian and record-setting holiday sales. Amazon CEO Andy Jassy acknowledged in an earnings statement that the retailer had faced higher costs due to labor shortages and inflationary pressures that have spilled over into the first quarter of 2022 but said the company had scaled up staffing and fulfillment to meet those challenges.
Amazon Market Cap: How Much Is Amazon Worth
Amazon is worth over $1.8 trillion, making it one of the most valuable companies on the planet. It surpassed $1 trillion in value back in 2018, and looks set to hit the $2 trillion level too joining the likes of Apple and Microsoft in the process.
Only six listed companies have reached $1 trillion in value:
Don’t Miss: Can You Buy Food On Amazon With Ebt
Should You Buy Amazon Stock
To be clear, stock splits don’t affect the value of the stock an investor holds.
“We wouldn’t use this as any reason by any stretch to buy the stock nor would we ever use a stock split announcement as a reason to become incrementally more positive on the stock,” Paul Hickey, co-founder of Bespoke Investment Group said on CNBC after Amazon’s announcement.
However, if you’ve had your eye on Amazon stock, the split would allow you to buy shares at a lower price. And Amazon is an investment Bespoke likes for the long-term, as the company has shown time and time again that it’s able to go into different sectors and be successful, Hickey said.
Amazon is “absolutely a good buy right now,” says Morningstar Senior Equity Analyst Dan Romanoff. The stock is one of his “top picks,” thanks in part to its advertising business and Amazon Web Services. Amazon’s Prime recent price hike also underscores Amazon’s pricing power, Romanoff wrote in a research note following Amazon’s most recent quarterly earnings report in February. The firm estimated Amazon’s value at $4,100 per share, meaning that it sees the stock as currently undervalued.
“Overall, we do not see issues with the long-term story as Amazon remains well positioned to prosper from the secular shift toward e-commerce and the public cloud over the next decade,” Romanoff added.
Amazons Stock Price And Quality
Amazon is one of the many stocks thats received a blue-chip status. In other words, this categorization means that the companys stock is highly reliable. Typically, businesses that perform the strongest in the market earn that title.
However, you should also take note of the companys share price before making an investment. As of September 2021, Amazons stock price runs around $3,524 per share, so its important to consider your long-term investment goals before purchasing Amazon shares.
Note that past performance does not guarantee future results. This chart is from September 2021.
You should always research stock before investing. Important factors to consider include the companys net income and earnings, which can be found on Amazons Form 10K. This is an annual report that all public companies must file with the SEC. In addition, it outlines everything from a companys total revenue and assets to its risk factors and liabilities.
You May Like: Can You Pay With Apple Pay On Amazon
Is It A Good Time To Buy Amazon Stock
The technical analysis gauge below displays real-time ratings for the timeframes you select. This is not a recommendation, however. It represents a technical analysis based on the most popular technical indicators: Moving Averages, Oscillators and Pivots. Finder might not concur and takes no responsibility.
This chart is not advice or a guarantee of success. Rather, it gauges the real-time recommendations of three popular technical indicators: moving averages, oscillators and pivots. Finder is not responsible for how your stock performs.
Decide Where To Buy Amazon Stock
Publically traded stocks vary in price by some distance, and Amazon is over $3,000 per stock at the time of writing. As such, when youre deciding on where to buy Amazon stocks, you might elect to do so at a brokerage that supports fractional trading.
This allows you to allocate smaller amounts to gain exposure to the company. To help you decide where to buy stocks, weve reviewed the very best brokers in the US.
Each platform will allow you to buy Amazon stock in fractional quantities. Most importantly each platform holds a license from the SEC and are members of FINRA.
Recommended Reading: How To Register A Kindle To Amazon Account
An Overview Of Amazon
Amazon.com, Inc. was founded in 1994 and is headquartered in Seattle, Washington. The company was founded by Jeff Bezos, whose parents invested $250,000 in the company to help it take off.
Since then, Amazon has grown into one of the worlds largest retailers and has become an e-commerce powerhouse. Jeff Bezos, who is still the CEO of Amazon, is one of the richest people in the world as a result of the companys growth over the past couple decades.
Even though Amazon was originally known for selling books, the company has expanded over the years to include a number of other products and services. Some of the most well-known services and products include:
- Amazon Web Services , which offers cloud computing
- Kindle reader
- Prime Video, which offers streaming content
- Amazon Prime, which offers two-day shipping and other benefits
- Home assistants Echo and Alexa
- Amazon Music, a music streaming service
Amazon also bought Whole Foods Market, which puts the online retail giant into the world of grocery stores. This also allows Amazon to manage grocery delivery, even though it is ostensibly an internet company. Another interesting acquisition by Jeff Bezos in recent years was the purchase of The Washington Post, the well-known newspaper.
Single Stocks Pros And Cons
Every stock moves in different ways due to things like liquidity and inventory on the book. In this regard, no two stocks will move the same. Obviously, this means that you need to trade each stock individually and apply different tools to gauge the stock price movement.
Maybe you found yourself in a position where most of your trades and subsequent profits come from one single stock.
If thats the case youre sitting on a gold mine.
Let me explain
Your psychology plays a big role in your success as a stock trader. And, the most important things that our minds absorb are in our subconscious. So, these are the things that were not aware of consciously.
Our subconscious is much better at internalizing things than you think. So maybe our subconscious is better to identify trading opportunities in Apple stock chart or Amazon or whichever the stock ticker may be.
So, if all your stock profits come from trading the share price of a single stock, ditch everything else and focus on that individual stock.
Milk that single stock until you become a stock millionaire!
Do you know how may stocks a NYSE specialist trade?
The answer is simple
One single stock!
There is a reason why the New York Stock Specialists focus on one market. They rarely have a losing day and they have been dominating the stock market for decades. I hope you see the correlation between single stock trading and profitability.
Youll begin to learn the ins and outs of that stock like no one else.
Don’t Miss: All Amazon Locker Locations
Is A Stock Split Good For Investors
The market gets excited when a stock split is announced. Amazon stock went up five percent in a matter of hours. Some investors find that puzzling, considering the split doesnt change the underlying value of the company. So, is a stock split good for investors? And if so, why?
The primary reason stock split announcements tend to prompt an increase in share price is that splits are a concrete sign that the company is thriving and that it expects additional growth. The need for a split means the company has been so successful that share prices have increased significantly so much so that average retail investors are unable to buy them.
After a split, share prices often get a boost as new investors begin to buy into the company. There is also increased demand from investors who leverage options strategies, as options contracts are written for 100 shares. Selling cash-secured puts or generating income through covered call writing is not practical and often not possible when share prices are valued in the thousands.
For Amazon specifically, this split may make the company eligible for inclusion in the Dow Jones Industrial Index, which is weighted by price. The Dow is made up of 30 companies that collectively represent the state of the economy in the opinion of decision-makers at S& P Global.
Achieve Greater College Savings Flexibility
If youre saving for education in a 529 plan or a Coverdell account, youre only allowed to use funds for qualified educational expenses. If you want to pay for anything your student needs that isnt considered qualified, a taxable investment account can give your savings a boost and provide increased flexibility.
In fact, complementing a 529 with a taxable brokerage account can be an ideal tax move: Your 529 account covers all qualified educational expenses, letting your taxable investment proceeds pay for expenses like room and board over the summer when school isnt in session, travel to and from home or abroad, and even incidental expenses throughout the school year.
Also Check: How To Connect Twitch To Amazon Prime
Avoid The Investing Scams
The risk involved with investing in stocks is not just related to the price of shares. Investors also need to be on guard against scams that may come their way during this time.
Many people look to take advantage of the current investment climate by promising returns that they cannot deliver.
Investors should never buy into any offer that seems too good to be true or seeks upfront fees without explaining how those funds will be used.
To avoid scams, investors need to know what their risk tolerance is and invest no more than the amount of money they are willing to lose.
When considering which broker to use, consider the following brokers above. All of these have millions of active users and have stringent cybersecurity protections. Further, they offer secure investments that trade openly on exchanges, allowing further protections of your money from theft or fraud.
How Much To Invest In Amazon
One of the most important considerations is how much money you can afford to put into Amazon stock.
The answer isn’t necessarily the same as how much money you have available. That’s because the stock market is considered a long-term investment, and financial experts typically warn against buying any stock with money youll need within the next five years.
Before buying individual stocks, it’s also wise to make sure you have an adequate emergency fund and that you’re saving for any important short-term goals.
With a stock price as high as Amazon’s, you might also be interested in fractional shares, which allow you to purchase a piece of a share based on a set amount of money you want to invest rather than the whole thing. Not all online brokers offer fractional shares, but the offering is becoming more common.
Whether you’re buying Amazon stock or shares in another company, the process is generally the same. Consult our full guide on how to buy stocks to learn more.
Read Also: How To Stop Audible Charges
How To Buy Amazon Shares
The easiest way to buy Amazon shares directly is through a brokerage account, which you would have to open if you don’t have one already.
Examples of popular brokerage platforms include:
Amazon shares trade with the ticker symbol AMZN on the NASDAQ exchange.
You can purchase the stock using either a market order or a limit order.
Should I Open A Cash Account Or A Margin Account
If youre an experienced investor and you want to actively trade the markets, you might consider opening a . Margin accounts let you invest more than you actually deposit into your account by using leverage, or borrowed money. If you trade using this money, a process called , you may magnify any losses you incur. So if youre relatively new to investing and dont plan to monitor your account regularly, its typically best to stick with a cash account.
Read Also: How Does Ebt Work On Amazon
Avoid Rmds In Retirement
If youre worried about required minimum distributions, or the mandatory minimum withdrawals the government requires of all but Roth IRAs once you reach a certain age, then a taxable account can allow you to keep your money invested for a longer period.
Under the current law with pre-tax dollars, investors must start taking distributions by age 72, says Phelps. Investors are not under any obligation to ever take a distribution from a taxable investment.
Consult A Financial Advisor
If youd like to buy stock in Amazon, but youre not sure you should, its always best to get expert opinions.
One way is to consult with a financial advisor.
He or she will have a deeper understanding of both the financial markets and of certain well-known companies.
You should never rely entirely on the recommendation of another person, even a financial advisor.
Compare the information you get from a financial advisor with the results of your own research.
Recommended Reading: Can I Use Apple Card On Amazon
Tips To Become A Better Investor
- Finding a qualified financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
- If youd like to invest, but arent exactly sure how much to spend, SmartAssets investment calculator can help you assess the potential long-term effects of your investment based on your financial goals. You can get a closer look at the possible turnover of your investment, as long as youve got your starting investment sum, the amount and the rate at which you aim to contribute and your expected rate of return.
Can You Buy Fractional Shares Of Amazon Stock
Yes, many brokers allow investors to purchase fractional shares of stock, including Amazon stock.
This is a great way for smaller investors to own a piece of Amazon when it’s high share price may prevent you from buy an entire share of stock.
Check with your brokerage to verify that fractional investing is offered.
Read Also: Use Apple Card On Amazon
Does Amazon Pay A Dividend
Amazons lack of a dividend certainly has not hurt investors to this point, as Amazon has been a premier growth stock. Over the past 10 years, Amazon stock generated returns of approximately 32% per year. But for income investors, Amazon may not be an attractive option due to the lack of a dividend payment.
Is It A Good Time To Invest In Amazon
The question that now may prevail is not whether to buy stock is in Amazon, but when to do so.
The AMZN price rose 71% in 2020, which marks its highest yearly increase. Yet, relative to earnings and potential, the , according to The Motley Fool. On an EV-to-EBITDA basis, Amazon is trading at 33.9, below its average historical and median values over the last ten years.
Don’t Miss: How To Do Payments On Amazon