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About Amazon
Why Invest in Amazon?
Differences between Investing vs Trading
About Amazon
Why Invest in Amazon?
Differences between Investing vs Trading
Amazon, founded by Jeff Bezos in 1994, started as an online bookstore and has grown into a global technology giant. With its headquarters in Seattle, Washington, Amazon is a leader in e-commerce, cloud computing, digital streaming, and artificial intelligence. The company operates numerous subsidiaries, including Whole Foods Market, Twitch, IMDb, and Zoox. Amazon is known for its disruptive innovations and extensive reinvestment of profits into capital expenditures, making it a major player in various industries globally. Amazon is a powerhouse in the global market, renowned not only for its e-commerce dominance but also for its leadership. The company's innovative approach and diversified revenue streams make it a compelling option for investors looking for long-term growth.
Amazon and the FAANG Companies
Faang companies, or "big tech" companies, are some of the most powerful and influential businesses in the world. They include Facebook, Amazon, Apple, Netflix, and Google(part of Alphabet). These companies are often at the forefront of new and innovative technologies, and their products and services have a huge impact on our lives. Amazon, for example, is one of the largest online retailers in the world, and its Prime membership program offers a wide range of benefits, from free shipping to exclusive deals and content.
Apple is another Faang company that has had a big impact on our lives; its iPhone devices are extremely popular and its App Store is used by millions of people every day. These companies are often referred to as "big tech" because of their size and power.
E-commerce Leadership Amazon is a dominant force in online retail, offering a vast product range and efficient logistics. Amazon Prime enhances customer loyalty through benefits like expedited shipping and exclusive content, driving a high rate of repeat purchases and sustained customer engagement.
AWS Dominance Amazon Web Services (AWS) is a key profit driver and the market leader in cloud computing. AWS provides a comprehensive suite of cloud services that significantly contribute to Amazon’s revenue and profitability, underpinning the company’s robust financial performance.
Technological Innovation Amazon invests heavily in cutting-edge technologies, including AI (Alexa), robotics, and autonomous vehicles (Zoox). Alexa, Amazon’s voice assistant, is pivotal in the smart home market, while Zoox focuses on developing autonomous vehicle technology. These innovations position Amazon as a leader in future market trends and technological advancements.
Media and Content Amazon Studios produces award-winning content for Prime Video, competing with other streaming giants. Twitch, a leading live streaming platform, expands Amazon’s reach in digital media and entertainment. These ventures diversify Amazon’s revenue streams and enhance its brand loyalty. Global Expansion Amazon’s international operations mitigate risks associated with economic downturns in any single market and offer significant growth potential in emerging markets Its global logistics network and localized services help capture a broad customer base across different regions.
Financial Health Amazon’s strong balance sheet, substantial cash reserves, and consistent revenue growth enable it to invest in new opportunities and sustain economic downturns. The company’s ability to generate cash flow from operations ensures it can support long-term growth and innovation.
Synergistic Subsidiaries Amazon’s strategic acquisitions enhance its market presence and service offerings. Whole Foods Market complements Amazon’s online grocery services, providing a seamless shopping experience. IMDb offers extensive information on films and television, while Ring specializes in home security products, broadening Amazon’s ecosystem.
The Pros & Cons of Investing in Amazon
| Pros | Cons |
|---|---|
| Diverse Revenue Streams AWS, Amazon Prime, and retail operations provide multiple sources of income. |
Volatility Stock price can be highly volatile, reacting to market news and broader economic conditions. |
| Innovation Leader Continuous investment in AI, robotics, and cloud computing keeps Amazon at the forefront of technological advancements. |
Regulatory Risks The company faces scrutiny from various regulatory bodies worldwide, which can impact its operations and profitability. |
| Global Presence Diversified international operations mitigate regional economic risks. |
No Dividends Amazon reinvests its profits to fuel growth, offering no direct dividend income to shareholders. |
| Financial Stability Strong financial position and substantial cash reserves ensure long-term sustainability. |
Analyzing Amazon's Financial Performance
Amazon's financial journey reflects significant growth and strategic expansion:
- 1997: IPO at $18 per share.
- 2006: Launch of AWS.
- 2015: Surpassed Walmart in market capitalization.
- 2018: Reached $1 trillion market cap.
- 2020: Revenue surge due to increased online shopping during the COVID-19 pandemic.
In 2023, Amazon reported net sales of $514 billion, driven by AWS and Amazon Prime’s expansion. The company's operating income was substantial, highlighting its efficient business model and revenue generation capabilities. As of May 2024, Amazon's stock price reached an all-time high of $189.50
Investing in Amazon with Skilling
Skilling provides an intuitive platform for trading Amazon shares, offering several benefits for traders:
- Multiple Trading Platforms: Including Skilling Trader and MetaTrader 4, providing various tools for different trading styles.
- No Maintenance Fees: Competitive transaction commissions ensure cost-effective trading.
- Regulated Broker: Licensed by CySEC, FSA, and other authorities, ensuring a secure trading environment.
It's important to remember that past performance is not necessarily indicative of future results and that investing in any stock carries some level of risk. Be sure to conduct your own research, and consider your own investment goals and risk tolerance before making any investment decisions.
Key Entities and Innovations
- Amazon Web Services (AWS): Leading in cloud computing services, contributing significantly to Amazon's revenue.
- Amazon Prime: A subscription service offering exclusive content, expedited shipping, and more.
- Alexa: Amazon’s AI voice assistant, pivotal in the smart home market.
- Whole Foods Market: Enhances Amazon’s physical retail presence and complements its online grocery services.
- Amazon Studios: Produces original content for Prime Video, competing with other streaming giants.
- Kindle & Audible: Dominates the e-book and audiobook markets, respectively.
- Zoox: Focused on developing autonomous vehicle technology, representing Amazon’s push into future mobility solutions.
- Ring: A home security company specializing in video doorbells and security cameras.
- IMDb: An online database of information related to films, television programs, home videos, video games, and streaming content.
- Twitch: A live streaming platform for gamers and other content creators, expanding Amazon’s digital content footprint.
Trading and investing both give you the potential to make a profit from the price of Amazon shares. However, the way you do it is slightly different. When you invest in Amazon stock, you’re buying the underlying asset. This means you own a piece of the company, and the value of your investment moves in line with its share price. So, if the Amazon share price increases from the point you bought stock, your investment should increase in value and vice versa.
When you trade Amazon shares, you aren’t purchasing the underlying asset. Instead, you’re speculating on share price movements. This means you can go long and profit when the Amazon share price increases or go short and profit when it decreases. This ability to take either position is the main reason you may want to trade Amazon shares instead of buying the underlying asset.
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| Commission and Swap | Commission and Swap |
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
Trade [[data.name]] with Skilling
All Hassle-free, with flexible trade sizes and with zero commissions!*
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FAQs
Are Amazon shares a good investment?
There are a few things to consider when thinking about Amazon as an investment. First, the company is heavily reliant on consumer spending, which can be volatile. Second, Amazon has a lot of competition, both from other e-commerce companies and brick-and-mortar retailers. And finally, Amazon's shares are not cheap - they trade at around 100 times earnings.
So, is Amazon a good investment? That depends on your investment goals and risk tolerance. If you're looking for a high-growth stock, Amazon may be a good option. But if you're risk-averse, there are better options out there. Amazon is a solid company, but its shares may be too risky for some investors.
Who owns most Amazon shares?
Amazon is a publicly traded company with many different shareholders. The largest shareholder is Jeff Bezos, the founder and CEO of Amazon. He owns about 16% of the company. Other large shareholders include The Vanguard Group, BlackRock, and State Street Corporation. Together, these three companies own about 30% of Amazon.
Do Amazon shares pay dividends?
Amazon has never paid dividends on its shares, and it is unlikely to do so in the future. This is because Amazon reinvests its profits into Amazon's growth, rather than paying them out to shareholders. While this means that shareholders don't receive any immediate income from their Amazon shares, it also means that they have the potential to earn much more in the long run as Amazon's share price grows.
Why Trade [[data.name]]
Make the most of price fluctuations - no matter what direction the price swings and without capital restrictions that come with buying the underlying asset.
CFDs
Equities
Capitalise on rising prices (go long)
Capitalise on falling prices (go short)
Trade with leverage
Hold larger positions than the cash you have at your disposal
Trade on volatility
No need to own the asset
No commissions
Just low spreads
Manage risk with in-platform tools
Ability to set take profit and stop loss levels