Company Overview Of Amazon
Headquartered in Seattle, Amazon is a global leader in the online retail and e-commerce market that provides both national and international services to its customers. Though the company initially began as a digital bookstore, it has grown to offer cloud services and other retail products through its massive network of sellers. In addition, the company has acquired other businesses, such as Whole Foods Market and Zappos.
Amazon is divided into five separate business segments: North America, International, Grocery, Subscription/Streaming and Amazon Web Services . Heres a breakdown:
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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.
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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.
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Is Buying Amazon Stock The Right Move For You
Anytime youre evaluating a stock, you need to decide whether its the right investment decision for you and your personal finance goals. One of the hazards of investing in individual stocks is that you could end up losing out if that company declares bankruptcy or goes out of business due to market volatility. Although its hard to imagine such a fate for Amazon, its still a possibility.
Another thing to take into account is that because Amazon had such an amazing run-up in stock price, getting in now isnt likely to provide you similarly dramatic returns. Many people who have made a lot of money picking individual stocks did so because they bought shares early on and benefited from the big gain in value. The time is past where you can buy Amazon for less than a few dollars per share and reap the big gains. However, you might still be able to meet your portfolio growth goals even when you buy fractional shares of Amazon.
If your goal is income investing, Amazon probably wont work for you. Amazon has never paid a cash dividend . It doesnt appear that Amazon is likely to adopt a dividend in the near future, though the company could decide to at some point. For the most part, Amazon stock is likely to work best for those who are looking for growth in their portfolios and believe Amazon still has room to increase in stock price.
Just remember that with investing, theres always the risk of loss, no matter what you choose to invest in.
Why Companies Split Their Stock
Mathematically, stock splits should end up being a wash for the company and its shareholders — but that’s not always the case. Stock splits are newsworthy. They prompt headlines. They get people talking. And that buzz naturally generates increased interest in a stock. For that reason, share prices tend to tick up when a split is announced and again when it becomes effective.
As noted, stock splits also reduce share prices — and a lower price per share can drive demand. Not everyone can drop $2,000-plus on a single share of Amazon, for example. But $100 per share? Far more investors can stomach that price point. Once the company implements the split, increased demand can also push the stock price higher.
Corporate leaders welcome these outcomes, especially when the market is struggling. That’s one reason why stock splits are picking up right now. A split can create momentum. And momentum, even the temporary kind, is a nice change of pace in a down market.
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Tractor Supply is a unique retailer and one that has successfully resisted the rise of Amazon and e-commerce. In this episode of “Beat and Raise,” recorded on Jan. 27, Fool contributors Will Healy and Brian Withers discuss Tractor Supply’s fourth-quarter earnings report and why the retail stock has such a strong track record. Brian Withers: Will is back, this time with Tractor Supply.
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Why Investors Care About Stock Splits
A company executes a stock split by issuing additional shares to current shareholders, based on how many shares those investors already own. In a 2-for-1 split, investors receive two shares for each share they already own. A 3-for-1 split triples the share count.
As the term “split” implies, the value of the companies’ shares is divided by the corresponding amount. A split does nothing to change the overall value of the company or the total value of the shares any investor holds. If you held a single $10 share of stock before a 2-for-1 split, you’d have a pair of $5 shares afterward.
“A split doesn’t change the intrinsic value of a company,” Sekera says. “It doesn’t matter if you have 340 shares at $1,000 or 1,000 shares at $340.”
Video by Courtney Stith
There are a few probable reasons why Amazon is headed to splitsville. Increasing the number of shares and making them cheaper means that more people potentially have access to the stock. Given Amazon’s near $3,000 per-share price tag, those who can’t or don’t trade partial shares of stock may be at a disadvantage when it comes to investing in the company.
Lowering its price per share may also allow Amazon to become part of the Dow Jones Industrial Average, says Neil Macneale, publisher of stock split newsletter “2 for 1.” Because the Dow is price-weighted, with the highest-priced stocks occupying the top spot in the index, stocks that are too expensive can’t be included.
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Amazon Stock Price Prediction
In 2021, Amazons sales increased by 22% to $470 billion. This boosted the companys operating profit to $24.9 billion, which illustrated a 9% increase.
According to Amazon, the retail division has remained in peak mode since the COVID-19 pandemic began. Meanwhile, the companys AWS cloud hosting service saw a 40% increase in sales last year.
- Despite these great figures, 2021 was far from flawless for Amazon.
- After financing charges, the corporation faced cash outflows of $20 billion due to a substantial increase in expenditures.
- Profits are expected to decline in 2022, compared to the high levels reached in 2021.
With that said, most market analysts foresee a robust return to growth in 2023 and think Amazon stock will continue to rise in the long term.
Some market commentators have predicted that stock could increase to as much as $5,000 in 12 months time. However, you should never invest based purely on Amazon price predictions.
The Spending By Prime Members Is Encouraging:
- 48% of Amazon Prime subscribers buy products online more frequently or once a week. On the one hand, 74% buy a product online at least every few weeks. On the other hand, 37% of nonprime members purchase online just a few times a year.
- Also, according to Amazon Prime members statistics, the following are the favorite Prime subscription benefits. Free two-day shipping , video and music streaming , PrimeExclusive deals at Whole Foods , free audiobooks & magazines , and other .
- Besides, Statista revealed that on average, an Amazon Prime Member spends $1400 on eCommerce shopping, compared to $600 spending of non-Prime members.
- 34% of current Prime members always buy Prime-eligible products, whereas 53% frequently buy Prime-eligible products.
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Etoro Overall Best Place To Buy Amazon Stock
eToro is a top brokerage that offers the overall best platform from which to buy Amazon stock. When you buy stocks on eToro, you wont pay any commission to invest in any of the 3,000+ stocks the broker offers access to. This trading platform is easy to use and offers access to over a dozen stock markets, covering the US, Canada, UK, Australia, Asia, and more.
Furthermore, we like that you can allocate just $10 when buying Amazon stock as eToro supports fractional stock investing. Signing up for an account to buy Amazon stock takes a matter of minutes, so you can have your account confirmed pretty much right away. You can also access the plethora of exchanges, manage your portfolio and invest in stocks via the eToro stock app.
Moreover, US clients do not need to pay a deposit fee and have plenty of supported payment types to choose from. This includes credit and debit cards, bank wire transfers, and also e-wallets such as PayPal, Skrill, and Neteller. The minimum deposit is just $10. If you decide to trade more than just stocks, you can also buy and sell over 250 ETFs with 0% commission via this brokerage.
At eToro, you can mirror the positions of top-performing stock investors by allocating some funds to copy trading. This is a simple case of investing $200 or more to a pro-investor. Any buy or sell order fulfilled by the seasoned investor will also appear in your portfolio. This is a passive way to build a diverse portfolio of top-performing stocks.
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Other Amazon Stock News
In other Amazon stock news, the company authorizes up to $10B in stock buybacks. The new program is replacing the 2016 $5B repurchase program.
To clarify, Amazon is not buying $10B in stock right now. Instead, the board allows the company to purchase up to that amount when they feel it makes sense for long-term growth.
Nevertheless, stock buybacks often suggest the company is doing well and feels it makes sense to reinvest. It can boost shareholder value by reducing the number of shares in some cases.
And lastly, the European Commission is to buy Metro-Goldwyn-Mayer for $8.45B. Although the deal still has a few hurdles to clear, the move would be huge for Amazons streaming selection.
MGM is the mastermind media studio behind the James Bond movies, Rocky, Creed, etc. Amazon can instantly boost its Amazon Prime Video catalog if the deal clears.
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Amazon Has Become The Platform Of Choice
- Interestingly, 63% of consumers start their search for a new product on Amazon. On the other hand, 63% compared prices on Walmart, 50% discovered new products or brands on Google, and 50% search for inspiration on Instagram.
- When it comes to checking reviews, 79% of U.S. consumers go to Amazon. On the other hand, 32% trust search engines like Google, 25% rely on a retailer website, 11% of consumers go to other marketplaces, whereas 7% trust social media channels.
- 49% of Americans usually start searching at Amazon when shopping online while 22% start at Google.
- More importantly, before making a purchase, 82% of consumers check prices from Amazon. Others check prices on search engines , retailer websites , brand websites , another marketplace , or social media .
- On average, 45% of U.S. consumers scroll through at most two search pages when searching for a product to buy on Amazon. Interestingly, 26% of consumers buy the first product to appear on the Amazon search results page.
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