Founded in 1994 in the early days of the internet, the company saw an opportunity to bring book retailing online.
While operating costs caused substantial losses for years, Amazon's business exploded in the 2000s, branching out into homewares, video games, music, and consumer electronics. Today, Amazon shares look promising to some commentators as people continue to migrate to online shopping for both consumer and business needs. (Currently at approx 138x earnings - 09/28/2020).
In 2015, Amazon became the largest retailer in the U.S. by market capitalization - something that many people thought would never happen. Today, Amazon is a powerhouse, with retail distribution around the world, and a leader in artificial intelligence (AI), media streaming, content production, and cloud computing.
Amazon stock price
Amazon (AMZN) Stock has been a strong performer over many years, with an almost unbroken run since late 2008. Apart from a sharp drop in December 2018, it has delivered consistent growth for more than 12 years.
In July 2020, Amazon's stock price shot from almost $1900 to $3200 thanks to a boom in online shopping due to COVID-19 forcing the closure of millions of retailers.
What the bears are saying
- Competitors abound: Amazon isn't the only online retailer. Millions of companies also sell directly via their websites or consolidated shopping sites like eBay and others.
- Amazon can only cut costs so much: Despite optimizing everything about their operations, the cost of delivering a parcel to a home address can only drop so far. Meanwhile, profit margins remain tight to stay competitive.
- The share price is high: Are Amazon shares worth $3000 each? Some analysts question the P/E ratio (at approx 138x earnings).
What the bulls are saying
- Content streaming is growing: Amazon's core business might be eCommerce and distribution. Highly scalable services like Amazon Prime could increase revenue and profit substantially for years to come.
- Jeff still runs Amazon: Companies that are run by founders tend to perform well over the long-term because there's a vested interest in delivering growth and profit.
- Cloud demand is growing: Despite being in a competitive market, the demand for AWS cloud computing services is growing strongly in 2020.
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*U.S. stock trading is not available in the U.S., U.K., and certain other.
This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice, and before taking any action you should consult your own advisors. Note that assets such as equities present unique risks for investors.
This content is correct as of October 2020
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