Amazon stock on the rise: Is the King of eCommerce a good buy?ย ย
Amazon stock is on theย riseย but will online retail momentum continue or will eCommerce stall?ย ย
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Online retail is slowing in a post-pandemic environment, as consumer habits return, albeit slowly, to traditional storefronts and Direct-To-Consumer businesses. This,ย in turn,ย has made tradersย readjustย their outlook forย Amazonย and other online retailers.ย ย
This week, weย takeย a lookย at Amazon andย findย out whether the King of eCommerce willย retainย its throne.ย We also share advice for allย tradersย on how to take advantage of price movements.ย
Trade Amazon theย easy wayย โ invest todayย
ย Amazon stock –ย Great weekย on the marketย ย
Amazonย saw a great end to August 21 with its share price increasing fromย $3211 on August 23 to a high ofย $3333 by August 27, a 4% increase. At the time of writing its share priceย hadย increased toย $3349.ย ย
It should be noted thatย Amazonโsย share price has been steadily dropping from a high ofย $3731 in July 2021.ย ย ย ย
Incredible Growth Potentialย ย ย
Amazonโs earnings may not have met investorย expectations,ย but this ignores its performance in a pandemic-hit market rife with uncertainty. Its sales were up 38% in 2020 and theyโreย expectedย to beย up 23% in 2021. Its net income was up 123%.ย Incredible numbers for a company of its immense size.ย ย
Theย eCommerce giantย is also heavily investing in growth; in 2021ย it’sย expected to investย $140 billion, up fromย $101 billionย last year. A good example of its growth is the increase of Amazon Web Service,ย bringing inย billions for the brand and expected to increase by 23% in sales growth.ย
Buy-now-pay-later on Amazonย ย
Amazon is set to give consumers more payment options as it partners with Affirm (AFRM); The goal is toย allowย customers to split their purchases into 3 or 4 monthlyย installments. Withย itsย latest venture,ย Amazon follows the likes of PayPal and Apple who haveย allย enteredย theย buy-now-pay-laterย space. The ongoing pandemic has changed spending behavior and Amazon hopes to garner more market share by proving alternate payment methods.ย ย
Affirm’sย shares rocketed by 40% following the announcement.ย ย
The eCommerce outlier – sales toย stall?ย ย
Amazon continues to be the titan of online shopping and its 2020 results prove how popular the brand is. Predictions on its performance for 2021 were never going to be 100% given how the pandemic affected the global economy. Projections have had to be scaled back despite Amazon’s superb Q2 results. Although online shopping will continue to grow, the company stated in its 2021 results that it would be focusing on services and experiences.ย ย
As the world returns to pre-pandemic normalcy, the retail market share will return to traditional storefronts, albeit slowly. Another big disrupter to Amazon and the entire retail space is the boom of D2C marketing as increasingly more businesses push to cut out the “middleman” and engage with consumers directly.ย ย
Inflation woesย
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The US has been hard-pressed to combat its escalating COVID crisis while keeping its economy afloat through economic stimulus packages. This has created a ticking timebomb of inflation set to hit consumers hard in theย tailendย of 2021. Already the possibility of a sharp increase in consumer pricesย has madeย many analysts and companies worried.ย ย ย
So, should you buy Amazon shares?ย
Buying into one of the world’s greatest companies, at highly attractive valuations, is not only prudent but could prove highly lucrative if you canย coincide withย your investment duringย the Earningsย Season. Amazon is here to stayย butย how well it will weather the storm of a changing global economy and high US Dollar inflationย remainsย to be seen.ย ย
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