Amazon is world renowned as the king of e-commerce and cloud computing. Many businesses can attest to the fact that Amazon has assisted them in becoming market leaders. Amazon holds 40-50 percent of U.S retail revenue, most Americans prefer shopping on the online website. What makes this company stand out from its competitors is the large selection of products and services they offer, customers pay as little as possible and their products get delivered in record time.
In recent years, the company has expanded its services, this includes providing customers with investment opportunities in the form of stocks. We decided to investigate whether these stocks are profitable.
You can find all the information you need to make an informed decision in the guide below:
Should You Buy Amazon Stocks?
Before investing in Amazon Stocks, it is important for you to know all the fundamentals along with its price movements and forecasts.
As mentioned earlier, Amazon is renowned for its e-commerce model and it is one that has been duplicated by many businesses through the years. At first, Amazon was only an online bookseller, which later expanded into digital entertainment, cloud computing and mobile products. Today, most retail products can be bought on the site.
As an online retailer, Amazon has benefited positively from social media and broader networks. There are approximately two million sellers and 300 million users worldwide. Social media has helped make the brand identity a more powerful marketing tool. It is no surprise that Amazon is considered to have one of the top brand values in 2019. It is reported that Online Ads and network effects helped sell $50 billion in products in 2019, increasing its total income from 20.5 % to $280 billion
Amazon offers its users instant gratification with its 1-day delivery policy. Digital shop sales have increased from 14.8% to $141 billion in 2019. The 1-day delivery policy was only implemented in the final quarter, but led to the highest increase in Prime subscriptions. Users who have prime subscriptions have shopping perks, music and movies among other benefits. With Amazon you can purchase a wide variety of products and services, including furniture, smartphones and groceries. All of which can be delivered to your doorstep.
Amazon Stock Performance
Amazon Stock is annihilating its competitors, especially during the COVID-9 pandemic which has caused a downturn in the markets in 2020. Amazon trades using high performing technology stocks, commonly referred to as FAANG (Facebook, Amazon, Apple, Netflix and Google). Using FAANG, Amazon stock has returned 10.77% to shareholders over the last year. During this global pandemic, Amazon Stocks has proven to be more resilient.
How Does Amazon’s Stock Dividend Work?
Amazon does not pay its users dividends. Instead of paying dividends, Amazon is constantly reinvesting in its business. This includes investing in more video content for Amazon Prime Video, building new data centers and hiring hundreds of software engineers among other investments. From our research we have found that Amazon’s stock value has increased to 130,000%. There are reports indicating that many investors are expecting Amazon to create shareholder value from its recent $13.7 billion acquisition of Whole Foods.
The good news is that Amazon’s approach has led to amazing returns
As an investor it is always important to know how the company you have trusted your funds with spends its revenue. In the event that you make a bad investment all the earnings and cash flow a company generates over several years may not accrue to shareholders at all if the revenue is spent on poor acquisitions. The alternative is that a company can reinvest all of its cash flow at high returns and make the company meaningfully more valuable in the long run. This is Amazon’s approach.
How Will You Receive a Return on Your Investment with Amazon?
With Amazon’s approach its annual revenue has grown from $148 million in 1997, to $281 billion in 2019. Some may think that this is absolutely false, but it is true. Amazon managed a 1,898-fold increase in net sales over 22 years. All of this growth was achieved without raising any equity capital. The company has generated revenue from its own business and used all of it to reinvest in growth, research and business development.
Investors who are seeking dividends must understand that Amazon has a strong reputation of generating far more than a dollar on every dollar of shareholder capital it retains in its business. This means that as long as the reinvestment opportunities exist, investors should always go for a company that puts their money to work rather than paying a dividend.
Investors who seek dividends can always create their own by selling a tiny amount of their stock every so often. If you choose to go this route you require a brokerage account that allows the trading of fractional shares, considering one share of Amazon goes for about $3,100.
How to Buy Amazon Stocks with eToro
1. Create Your eToro Account
Creating your eToro account is quick and easy. All you need to do is register, using your basic contact details and email address and log into your newly-created eToro account within minutes.
2. Complete Your Profile
Once you have created your account, you will be prompted to complete your profile before starting to trade. This information is mandatory and is used for compliance with the AML and CTF regulations. Once this is done, click the complete profile button under your username and follow the next steps.
3. Fund Your eToro Account
After completing setting up your account and registration, you will need to fund your account. The minimum deposit currently accepted by eToro is $200, or equivalent in other currencies. eToro offers a wide variety of payment methods including, Credit and Debit Card, Paypal, Wire Transfer and other methods.
4. Buying your Amazon Stock
Once you have funded your account, you can start with trading stocks on eToro. You have the choice of buying a stock or shorting it. This depends on how you predict the market is going to move forward.
Here are the simple steps on how to buy your stocks on eToro
Step 1: Search for Amazon Stock
Step 2: Click on the Trade option
Step 3: Click on the Buy Option
You may be wondering if investing in Amazon shares is such a good idea. Well, we definitely think so. Amazon is proving to turn new business lines into profitable industry leaders. With the global stock market in decline, it may be a prime time to invest in Amazon stocks. When you are ready to start investing, we recommend doing so via a regulated and trusted broker such as eToro.