7 min readAmazon has come a long way since its humble beginnings as an online bookstore back in 1994, and an IPO value of just $18.00. Today, Amazon stock value sits at 10 times its IPO value at $183.62, with a market cap of $1.91 trillion and is practically synonymous with e-commerce.
Its value, though, isn’t completely in its e-commerce business, although it dominates the segment. Amazon also offers various technological services through Amazon Web Services, like natural text-to-voice generation, cloud computing, live streaming, website and even game analytics.
It even has a robust streaming solution that produces its own content, an IoT solution in the form of Alexa, and home automation and security through its subsidiary Ring which it acquired in 2018.
Amazon has shown a high level of adaptability, eagerness to innovate and stay competitive, which, of course, boosts the company’s stock value.
Amazon’s historical stock performance
Amazon’s IPO
Amazon’s initial public offering was a meager $18.00. Today its stock prices are an impressive $182.62. Amazon stock reached an all-time high of $188.69 with its all-time low being a respectable $183.00.
$1000 investment today
If you invest $1,000 in Amazon right now, you would own roughly 5.5 stocks. If the value of the stock increases the same way it did previously, then you could turn $1,000 into $10,000. But if you don’t have the patience, in the last six months, Amazon stock has grown by 45% and has experienced 22% increase since last year.
80% return YoY
If you bought Amazon stock in the last 6 months, you would have made $450, and if you had bought it at last year’s lows of $101.15 you’d have almost doubled your initial investment – netting you $800.
Between mid-2020 and 2022 its price change percentage remained above 80%, even approaching 100% at times.
The biggest gains Amazon stock experienced in the recent decade was during the pandemic, when consumer activity moved online and was boosted by stimulus checks people received in the US. During this period, Amazon saw its profits skyrocket by 220%, this included a 64% boost from its merchants using its services and its advertisement services seeing a 77% increase as well.
Amazon’s stock price contracted significantly, shedding 51% of its value, resulting in its worst year since 2000 when it lost a staggering 80% of its value due to the Nasdaq/Tech bubble bursting.
But the company’s stock still performed better than its counterparts Tesla and Meta.
Factors influencing the future of Amazon’s stock price
Let’s hope we won’t experience another globally disruptive event in the coming years. What we may experience though is a shift in tech. Although the longevity, accuracy and applicability of AI is still not concrete yet, partially due to being over-hyping the tech and hardware limitations. New more valuable applications may cause a surge in cloud computing demand, a business Amazon is already heavily invested in.
Amazon stock and economic health
Additionally, we are currently emerging from a period of high interest rates and inflation, that are now slowly dropping, which will contribute to increased consumer spending.
But e-commerce isn’t even Amazon’s highest margin service, its advertising and services it offers to third-party sellers is actually what is pushing bigger profit margins than it’s online retail services.
Of course as we’ve mentioned earlier, stock prices are directly tied to general economic health. The same goes for the stocks mentioned, i.e. Amazon.
Expert predictions and analysis
The Motley Fool stock advisor is not only extremely bullish on Amazon’s e-commerce, but also the Amazon subsidiary Whole Foods Market. If you are unaware, Whole Foods Market is an Amazon subsidiary that offers a healthier, upscale grocery shopping experience.
The Motley Fool, seem to be doubly bullish on Amazon. Fool.com contributor Parkev Tatevosian, considers Amazon a top stock pick for this year. At the same time, The Motley Fool Stock Advisor service added Amazon stock to their Top 10 list.
Yet another stock advisor service makes a long term prediction, based on the company’s previous performance, estimating an astounding $333 stock value by the end of 2030.
Fool.com contributor Parkev Tatevosian on the other hand estimates Amazon’s price to reach a record-breaking $417.28.
Amazon stock – buy, sell or hold?
If Amazon’s current price is at $182.62 and that it is expected to almost double, any stock advisor worth their salt, would say Amazon is a strong buy. A very competent stock advisor returns a few percentage points a year. An unbelievably few talented stock advisor returns can reach double-digit and few if any can comfortably offer to double their client’s investment.
Amazon’s growth strategies and market opportunities
Amazon is not only in constant expansion, it is acquiring new companies at a breakneck pace, like with Twitch in 2022 and Fig just last year.
Amazon stakes in other companies
Amazon additionally has numerous stakes in other technology companies and retail companies. This includes the challenger EV company Rivian and AI giant Anthropic.
Investment perspectives
DCA or Dollar Cost Averaging is a great investment strategy at this specific moment, since for a relatively small incremental investment, you can accumulate a relatively large portfolio over the next six years.
Risks and considerations
Any type of investment carries a certain amount of risk. But there are ways to effectively avoid it by diversifying and using certain types of order like stop-loss.
Conclusion and future outlook
Amazon is giving strong buying signals and a promise for impressive growth in the future. But invest wisely.
Author
Risk Disclaimer
