Amazon, the online retailer, is among the most prominent and well-known corporations globally. During the epidemic, Amazon’s value and popularity surged as the closure of physical establishments worldwide forced individuals to make purchases online. Amazon now sells over $100 billion worth of merchandise every quarter; it all started as an online bookstore outside of Seattle, Washington, in 1994. You can now purchase almost anything with your Amazon account. As a result, their stock price has soared in recent years. Here, among other things, we’ll go over the steps you need to take to purchase Amazon stock on your own.
You can’t afford this stock
Be aware, first and foremost, that Amazon stock is pricey. Expensive, like, really so. At the time of publication, the price of one share of Amazon stock was approximately $3,600 USD. That’s a lot of dough in comparison to eBay, a competitor in the online shopping space, whose stock is $70 per share. Shares of even another popular company in recent years, Tesla, trade at over $650. Unless you’re thinking about fractional shares, you’ll need a sizable sum of money to purchase many Amazon shares.
Amazon’s enormous size, general success, and popularity all contribute to the high stock price. The stock price has soared in tandem with the company’s meteoric rise to fame. A share of Amazon stock would have cost $745 five years ago. That’s still pricey, but it’s a fraction of what it is now. But what will it be worth in another five years? What will it be worth?
Exorbitant Profits
It wasn’t until 1997 that Amazon’s stock debuted on the NASDAQ market. Investors could purchase the stock for $1.73 at that time. Since then, the stock price has risen by more than 200,000%. Doubling down on that is absolutely correct. In just twenty-five years, that’s an incredible return.
If an investor had put $100 into Amazon shares following the company’s IPO in 1997, they would now have about $150,000. That is an excellent strategy for retirement. The company’s growth throughout the years has resulted in numerous dividend payments to shareholders. In the long term, will Amazon be able to keep giving investors such high returns? Although it is impossible to know what the future holds, their performance thus far has been commendable.
Is a stock split not happening?
It is common practice for companies to divide their shares when their value rises too high. Doing so makes investing more affordable by lowering the price per share. The 2020 stock split by Apple, for instance, was four for one. For every share they already owned, investors received four additional shares, each valued at 25% of the original. The lower price may attract new investors, but a stock split does not result in any losses for anyone.
From 1998 to 1999, Amazon quickly split its stock three times. But stock splits have been absent from the company’s operations for over 20 years. Despite frequent requests and the company’s skyrocketing share price, they have steadfastly refused to implement another stock split. No stock split is in the near future; therefore, investors should act quickly.
Dividend Not Paid
Shareholders receive a payout known as a dividend, either quarterly or annually. Distributing a portion of their earnings as dividends to investors is a common way for publicly listed firms to reward their shareholders. For instance, in the event that the company maintains its current rate of development and performance, it may propose to pay investors $2 per share once a year or $0.50 per share every quarter.
When it comes time to retire, a lot of investors count on dividend payments. Amazon does not pay dividends; thus, investors seeking dividend payments should seek out other investments. Instead, the firm claims it uses its earnings to bolster its operations and increase the value of its stock through reinvestment. The corporation claims it will reward shareholders in this way: by continuously increasing the value of their stock.
Examination by Congress
Amazon has been under growing criticism from politicians in Washington, D.C., as it has grown larger and taken over the online retail sector. Now there are lawmakers who say the corporation has a monopoly. Similar to Microsoft’s situation in 2001, some lawmakers have even threatened to dissolve the corporation.
Potential investors should be aware of this congressional scrutiny. It might reduce investment returns and has already begun to affect Amazon’s share price. A number of congressional committees have summoned Amazon CEO Jeff Bezos and other internet company heads, like Apple and Facebook’s Mark Zuckerberg, to testify within the last year.
Leadership Transition
Investors should also be aware that Bezos, who transformed the company from a little bookstore into the behemoth it is today, has recently resigned as CEO. He is still involved with Amazon, but he will no longer be responsible for running the business on a daily basis.
Andrew Jassy, a businessman and long-time executive at Amazon, has recently succeeded Bezos as CEO of the company. Bezos’s net worth has surpassed $200 billion, making him the wealthiest person in the world. The new chief executive officer is a Harvard alum and has extensive experience running the AWS division at Amazon. Will Jassy be able to revolutionize Amazon? Whatever happens next is anybody’s guess.
Different Companies
Amazon has expanded beyond its original mission of selling books online. You may have noticed that the site now sells practically anything imaginable. When it comes to revenue, Amazon has diversified even further than that business model. Amazon actually owns a plethora of non-e-commerce companies, which may come as a surprise to you.
Amazon owns Whole Foods, a prominent North American food business. In addition, they run Amazon Prime, a streaming service that competes with Netflix and Disney+. For business solutions, there is also web storage and cloud computing (the aforementioned AWS). Alexa, the virtual assistant that comes with their smart speakers, is another product line that they manufacture and sell. Online retail is still Amazon’s largest and most lucrative business area, but it’s far from the only source of income for the company.
Novel Technology
Several innovative technologies, such as self-driving cars and delivery drones, are part of Amazon’s experimental portfolio. As a pioneer in the technological industry, the firm takes great delight in its position. Who can say what amazing new product Amazon will release next?
Having said that, not every innovation from Amazon ends up being a hit. Unveiled in 2014, the now-infamous Amazon Fire smartphone was actually one of the biggest product failures ever. Consumers received the smartphone so poorly that the manufacturer decided not to return to the smartphone market.
Plenty of Inventory on Hand
With over 500 million shares in circulation, Amazon stock is among the most extensively owned in the world. This indicates that buying and selling the stock is a breeze. Nearly all retail and online brokerages allow investors to purchase shares in Amazon.com, Inc. (NASDAQ: AMZN).
Reducing the number of outstanding shares and increasing the stock’s value is the goal of the company’s infrequent stock buybacks. This ensures that Amazon stock is available to investors at all times. Naturally, this is only possible if they possess the necessary financial resources.
Activist investors are focusing on them
Amazon is often the focus of activist shareholders due to the company’s size, impact, and well-known brand. Activist shareholders frequently propose changes to the corporation’s corporate structure and governance. Investors should be aware of this, even if it almost never works.
Activist investors have asked for a number of changes, including more worker safety measures, employee unionization, more environmental sustainability, and less lobbying on the part of the corporation in Washington. Amazon typically views these proposals as a source of frustration. Ultimately, they are nearly always rejected.
Caution: Never risk more than you can afford to lose when investing in stocks. Ultimately, one cannot predict the market.
In Conclusion
If past performance is any indicator, Amazon is an excellent long-term investment. Investors may be disappointed that Amazon does not offer dividend payments or share repurchases, but they cannot deny the stock’s remarkable return on investment (ROI) over the years.
Amazon stock is among the best-performing equities ever, with gains of almost 200,000% since its initial public offering (IPO) in 1997. No one can say for sure what the stock market will do in the future, but right now, it seems like Amazon will keep climbing the ladder of success. Amazon is a solid investment option for anyone seeking a stock that has a track record of consistent profitability. It is possible that the high initial investment will be worthwhile.
