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It is time to invest in Amazon
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According to forecasts, Amazon stocks will increase by 119.37%. Below you'll find 5 benefits of buying Amazon stocks
Key features
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The stock price of Amazon went up by over 450% in the last five years with returns more than six times higher than 67% of the S&P 500 index.
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Amazon's stocks could reach 10,720 € by mid-November 2024.
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The shares climbed by a staggering 2,220% within the past ten years.
A major advantage of owning Amazon stock is the company's willingness to take large market share in a variety of industries.
Medium to long-term investments can be life-changing if you buy and hold the really big companies. Although not all stocks perform well, once investors get in, they can make big profits.
Take a look at the stock price of Amazon.com, Inc (NASDAQ:AMZN). At the time of writing, the stock is up more than 450% from five years ago, which is more than six times the 67% return of the S&P 500 index. The stock is also up a staggering 2,220% over the past decade.
With the continuous growth of online retailing and the ever-thriving e-commerce sector, AMZN stock has risen so fast in recent years that the company is now worth almost 1 trillion euros.
1. Exceptional Corporate Governance
Just like Facebook (FB), Netflix (NFLX), Alphabet (GOOGL) and other highly successful Silicon Valley companies, Amazon is a founder-led company. But Jeff Bezos' leadership, even compared to the enviable success stories of these names, is remarkable.
Bezos' obsession with customer service is now central to Amazon's ethos - just like his ruthlessness. And if there is any doubt, Bezos is also the largest shareholder of Amazon stocks (12%), so his interests are clearly aligned with those of shareholders.
Bezos didn't become the richest person in the world by coincidence - he's the best capital allocator in the world right now, which means he is rarely unprepared for future opportunities and challenges.
2. Amazon is intervening in numerous industries
To put it simply, another advantage to owning Amazon stock is the company's willingness, drive, and ability to reach an extraordinary variety of industries.
Amazon.com began as a disruptor, driving local bookstores out of business because of its size, low overhead, and convenience. It didn't take long for Amazon to move from selling books to all sorts of products - toys, electronics, clothing, and tools - to name just a few.
The e-commerce giant's ambitions continued to evolve until it surprised Wall Street in 2017 by acquiring the organic supermarket chain Whole Foods for 13.4 billion euros.
The company even offers its own branded credit card, is expanding its own delivery service, and is seriously considering entering retail banking.
3. Amazon still has a massive addressable market
Amazon's Total Addressable Market (TAM) is the largest among the leading internet tech platforms. It is estimated that Amazon's e-commerce platform has a TAM of $20 trillion, but only about 10% of it is tapped. The company's most profitable segment, Amazon Cloud Services (AWS), has an additional $1 trillion in TAM and is also only about 10% tapped.
Moreover, Amazon has only reached about 30% of the $1 billion potential advertising opportunities and 10% of the $5 billion potential advertising opportunities in the business needs market.
4. Amazon outperforms its competitors
With over 100 million loyal Prime subscribers, more than half of all U.S. shoppers now start their searches on Amazon. Amazon's share of the U.S. e-commerce market is about 40%, but that share continues to grow. Given that Amazon is investing in improving convenience - variety as well as pricing, -it could, and likely will, be extremely difficult for competitors to keep up.
5. Amazon generates consistent growth
Even though Amazon may no longer generate the 40%+ revenue growth it once did, the mere fact that only two of Amazon's last 66 quarters have produced organic revenue growth of less than 20% is extremely impressive. Amazon's profitability has been inconsistent due to its high growth investments, but it has also been consistently positive over time, averaging 21.5% revenue growth over the last four quarters.
Will Amazon's stock price skyrocket?
According to the online forecasting service Longforecast.com, the company's share price will rise in the long term, with Amazon shares expected to trade at 2,398 euros by November 2021. Another forecasting service, Wallet Investor, has also taken a confident stance, expecting Amazon shares to trade at €3,841 by November 2024, which would mean that if invested today, returns in five years would be around +119.37%. Gov Capital offers the most optimistic outlook of all with its forecast that Amazon shares could reach a price of €10,720 by mid-November 2024.
Conclusion
So should you buy Amazon stocks before the end of the year? As with any other form of investment, there is no guarantee of success. However, according to the stock trend analysis and forecasts on Amazon, there is definitely a good chance that the company could add considerable growth to your portfolio during the next two years.