Zacks Equity Research
·3 min read
How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Amazon (AMZN) ten years ago? It may not have been easy to hold on to AMZN for all that time, but if you did, how much would your investment be worth today?
Amazon's Business In-Depth
With that in mind, let's take a look at Amazon's main business drivers.
Amazon.com is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. Its online retail business revolves around the Prime program well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish footprint in physical grocery supermarket space.
Amazon also enjoys dominant position in the cloud-computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS), which is one of its high-margin generating businesses.
Amazon has also become a household name with its Alexa powered Echo devices. Artificial Intelligence (AI) backed Alexa is helping the company sell products and services.
Revenues were $513.98 billion in 2022. The company reports revenue under three broad heads—North America, International and AWS, which generated 61.5%, 23% and 15.6% of total revenues, respectively.
Headquartered in Seattle, WA, Amazon targets three categories of customers—consumers, sellers and website developers. Consumers are offered variety, convenience and free delivery of goods displayed on the company’s websites. The agreements with sellers are varied, enabling them to use the company’s websites to either sell their merchandise directly, or redirect customers to the sellers’ own branded websites. In case of the latter arrangement, Amazon earns a fee for the sales thus generated.
Competition comes in the form of traditional retailers, other online retailers, media companies, web portals, search engines, e-commerce companies and cloud computing service providers.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Amazon ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in November 2013 would be worth $8,061.01, or a gain of 706.10%, as of November 21, 2023, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 155.27% and gold's return of 49.14% over the same time frame.
Looking ahead, analysts are expecting more upside for AMZN.
Amazon’s third quarter results were driven by Prime and AWS momentum. Strengthening AWS services portfolio and its growing adoption rate contributed well. Ultrafast delivery services and expanding content portfolio were beneficial. Strengthening relationship with third-party sellers was a positive. Robust advertising business contributed well. Improving Alexa skills along with robust smart home products offerings were tailwinds. The stock has outperformed the industry it belongs to on a year-to-date basis. Amazon’s strong global presence and solid momentum among the small and medium businesses remain other positives. Growing capabilities in grocery, pharmacy, healthcare and autonomous driving are other positives. Also, deepening focus on generative AI is a major tailwind. However, rising inflationary pressure remains a concern.
The stock has jumped 15.46% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 11 higher, for fiscal 2023; the consensus estimate has moved up as well.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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