One of the biggest and most well-known businesses in the world is Amazon. Investors continue to swarm to the e-commerce giant despite the stock price’s phenomenal growth since the company’s founding. Have investors missed the opportunity to purchase Amazon shares, given the company’s phenomenal past success?
In this article, we’ll be answering the query, “Should I invest in Amazon?,” we’ll also show you how to purchase Amazon stock, among other things.
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Amazon Financial Results
Take a close look at the business and its financial performance before deciding whether or not to invest in Amazon stock, or any other company’s stock for that matter.
For the past ten years, Amazon has not had trouble making money. However, turning this revenue into a meaningful profit has been challenging because founder Jeff Bezos prefers investing in future growth over meeting earnings targets.
Amazon has expanded and dominated several markets thanks to this significant investment, and profits have inexorably started to appear; 2017 was its breakthrough year in this regard. Profits have been şirinevler escort steadier and more predictable ever since.
This trend, however, has reversed in 2022, with the world’s largest e-commerce company posting a total net loss of $5.9 billion in the first half of the year.
| Q2 2022 | Q2 2021 | % Change YoY | |
| Net Sales | $121.2 billion | $113.1 billion | 6.7% |
| Operating Income | $3.3 billion | $7.7 billion | -57% |
| Net Income | $(2 billion) | $7.8 billion | – |
| Earnings per Share (EPS) | $(0.22) | $0.77 | – |
As a result of high inflation, Amazon’s input costs have increased. Amazon generated $237.7 billion in net sales in the first half of 2022, up 7.3 percent annually (YoY). Operating costs, on the other hand, increased 12.5 percent YoY during the same time period.
More significantly, losses on the company’s investment in Rivian Automotive, whose share price fell by more than 75% in the first half of 2022, are largely to blame for this year’s negative net income.
As a result, rather than the company performing poorly, external factors have contributed to a large portion of Amazon’s losses this year. So, is it a reasonable idea to invest in Amazon? Let’s examine Amazon’s most recent stock market activity.
An Analysis of Amazon’s Share Price
In the five years that led up to 2020, Amazon’s share prices had increased by more than 170 percent.
Amazon was one of many technology stocks that benefited greatly from the restrictions in place in 2020 as the Covid-19 pandemic spread across the globe. By year’s end, the price of an Amazon share had increased by over 76%, but in 2021, growth slowed to just 2%.
Amazon shares have suffered thus far in 2022, caught in the general downturn that has impacted many other companies. The share price decreased by more than 36% in the year’s first half, but it has since partially recovered.
Investors now can purchase Amazon shares at a discount thanks to the decline in share price.
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5 Reasons To Invest In Amazon
AWS is the cloud leader
Amazon shares AWS cloud business is the best opportunity for significant large-scale growth in the technology industry. He calculates that the addressable market for AWS is $300 billion. Microsoft Corp. (MSFT) is a respectable cloud rival for AWS, but Amazon enjoys a sizable first-mover advantage due to its sizeable market share. In fact, AWS’s revenue of $45 billion in 2020 surpasses that of Microsoft’s Azure and Google Cloud combined. AWS’s high-margin revenue should eventually increase the company’s overall margins.
Amazon Takes Care Of Its Customers
Unlike most large corporations today, Amazon has set out to become “Earth’s most customer-centric company.” The majority of the time, Amazon gets it right when it comes to its customers’ needs. By constantly enhancing services and introducing options for faster deliveries.
Businesses that look after their clients are more likely to be recommended to family and friends and used again. A content customer is a raving fan!
It’s developing a robust advertising business
The fact that Amazon has developed a strong advertising business is another compelling argument for investing in the company. Over the last six quarters, Amazon has seen a more than 25% increase in ad sales. Ad sales in Q1 came to $7.9 billion. Similar to the AWS segment, advertising is a successful industry. Other than the upfront costs to set up the capability, the cost of additional ad sales is minimal.
More than 200 million people have subscribed to Amazon Prime. These people have access to fast and free delivery from Amazon and have a payment method saved to their accounts. They can also buy something with just one click. Perhaps no other piece of advertising real estate is as near to a consumer’s point of sale. It makes sense for most marketers to want to influence how customers behave on the Amazon app and website.
It’s a Long-Term Winner
Additionally, the company’s strengths extend beyond just its web services. Amazon appears ready to enter any sector where it sees inefficiencies and thinks it has a competitive advantage.
This is evident in Amazon’s plan to improve its flywheel of goods. The business is in a good position to dominate the advertising industry. One of the biggest streaming services is offered there. Additionally, it has a vast array of side businesses, including gaming, logistical services, streaming services, technology, and venture capital investments.
Jeff Bezos Owns Stake
Although it may not seem like much, Jeff Bezos owns a nice 11.7 percent of the business, which is worth $102.6 billion.
Making decisions that will significantly increase the company’s stock is highly motivated when you have over $100 billion on the line, not to mention your own business. If you’re looking to invest in Amazon, this is fantastic. Investors can rest easy knowing that Jeff Bezos himself has a lot to lose if the company doesn’t do well, even though it’s not a guarantee that the company’s value will soar.
The Amazon stock is cheaper than it has been in years
Amazon stock is cheaper than it has been in years, which strengthens the argument for purchasing Amazon. The price-to-sales ratio of 2.3 and the price-to-earnings multiple of 52 for Amazon are both close to their five-year lows. The company’s stock is significantly below its highs due to the general market sell-off. The recent stock split has made the buying decision even easier.
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Conclusion
Amazon is growing rapidly, so investors can grab this opportunity to capitalist in due course. It is sure to pay investors in the near future. If you feel that investing in Amazon stock is the right decision for you, you can buy shares in Amazon with Stockal. Conduct your own research and then make an informed buying decision.
