Amazon Stock Now Looks Set For A Strong 2016

  • From humble beginnings, Amazon has grown into the world's largest ecommerce site by sales.
  • Amazon continues to innovate, and increase revenue streams.
  • AWS has begun to show profits this year, and could become Amazon's primary revenue source in the near future.

Apple (NASDAQ:AAPL) did it in the consumer tech industry, Alphabet Inc-C (NASDAQ:GOOG) did it with advertising, and now Amazon (NASDAQ:AMZN) is doing it in the e-commerce realm. I am talking about having an appetite to innovate, diversify, and increase market share. Amazon's growth from a bookseller to the world's leading e-commerce 'empire' is a story almost perfectly built for a Hollywood motion picture. In fact, not only is Amazon leading in terms of e-commerce, they have also trumped the competition in the cloud computing space with Amazon Web Services (AWS). To put this into perspective, AWS is bigger than its next 4 largest competitors combined.

In order to have a better understanding of how Amazon has been able to gain such a strong foothold, it is worth diving in deeply into their interests.

e-Commerce

Amazon currently holds the enviable title of world's largest e-commerce retailer. Jeff Bezos and co. have managed to achieve this by taking innovative actions, and being one of the first to have an engaging email marketing strategy. Amazon has approximately 270 million users, 50-70 million hold an Amazon Prime subscription. Due to their hunger for a bigger slice of market share, they launched Amazon Prime student a few years. This gives students Amazon Prime on a 6 month trial membership after which, the cost is halved. It is hoped that students will stick with Prime after graduating. To this regard, Amazon is trying to increase its user base for the future.

The growth of Amazon Prime is vital. Research shows that Prime users spend approximately double as those without membership. Now with the introduction of 1 day delivery, that could improve further.

Amazon doesn't just have the biggest e-commerce site on the planet, they also have the most influential one. Research shows that 44% of online shoppers visit Amazon first. Even when they don't buy, Amazon is able to learn more about their interests for future campaigns, or in the short term, target them with ads as they browse the web.

A significant portion of Amazon's growth lies in the formidable 'machine' powering the fulfillment of each order. In order to increase revenue at little startup cost, they have 'lent' access to business people. As a result, they can have their goods delivered to Amazon, and sent out whenever a customer makes a purchase. Due to the consumer trend towards shopping more online, you can expect the income generated from this venture to increase.

 AWS

Amazon Web Services is the market leader in cloud computing by a significant margin. Amazon utilized the same undercutting strategy it employed for its e-commerce platform. As a result, they have been able to capture the minds of developers.

In order to quantify the growth rate of AWS, it is worth noting that it has ballooned by 81% year-on-year, can boast of more than a million active business customers, and has grown into a $7.3 billion business. Due to greater demand for scalability, and AI improvements in the tech industry, expect revenue and profits from AWS to increase significantly.

Regardless, Amazon is still trying to squeeze out as much as it can from AWS. As a result, Amazon recently unveiled AWS IoT. Interestingly, this is perceived by many as the next big growth opportunity in the tech industry. Research led by IDC suggests that this market could generate an astounding $1.7 trillion by as early as 2020. This technology will allow for greater wireless connectivity between devices. Essentially, it will introduce the 'robots age'.

Financials

Amazon has been able to post some strong financial results over the past few years. For instance, Amazon has enjoyed Y-o-Y revenue growth over the past 9 years. Additionally, earnings growth is up by 117.89% over the past year alone, and with services such as Amazon Prime Air set to debut next year, expect the growth rate to increase significantly. As a result of this impressive revenue growth, Amazon stock value has shot up by 101.56%.

Conclusion

In conclusion, Amazon continues to grow from strength-to-strength. Recent strategic moves such as AWS, and the development of Amazon Prime Air shows that they are a company with their eyes firmly set on the future. Amazon has its hands in many highly profitable pies. Therefore, the big question is not if they can keep growing, but which company can get in their way? For now, Amazon stock looks set for a good run in 2016 again.

Show Full Article
5 2
Is this article helpful ?    


Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

show more

Comments on this article and AMZN stock

Do share this awesome post