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You'll now be able to see real-time price and activity for your symbols on the Quotes of Nasdaq .com. Having grown by 72% since the end of 2019, Amazon ’s stock (NASDAQ :AMZN) still has growth potential in the near term.
The company has seen a high revenue growth over recent years, and its P/E multiple has fallen compared to 2017. During the Covid-19 crisis, Amazon saw its revenue rise by 35% in the first 3 quarters of 2020 as consumers preferred online shopping to reduce the risk of infection.
Further, the company reported $146 billion of cash inflows from operating activities for the first nine months. In addition, the EPS figure will likely improve to $60.52, which coupled with the P/E multiple of around 62x will lead to Amazon ’s valuation around $3758, about 18% upside compared to the current market price.
The stock price increased during this period as margins and revenue grew, despite the P/E multiple normalizing from 150x in 2016 to 79x in 2019. The multiple has shot up again this year, though, as people are turning towards online retail and web services during the coronavirus pandemic, and the figure currently stands at an elevated level of around 140x.
The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. The actual recovery and its timing hinge on the broader containment of the coronavirus spread.
What Happened: The e-commerce giant had given Parker a 24-hour notice late Saturday, saying it couldn’t “provide services to a customer that is unable to effectively identify and remove content that encourages or incites violence against others,” as reported by TechCrunch. A group of Amazon workers had written to the company, demanding that it stops providing services to Parker.
Despite the chaos brought on by the coronavirus disease 2019 (COVID-19) pandemic, one FAANG stock has been steady as a rock. E-commerce giant Amazon (NASDAQ :AMZN) was never lower than the height of the stock market crash in March, when it was down 9% for the year.
The Trump administration lowered the peak marginal corporate tax rate to 21%, which represents a roughly eight-decade low. That's great news for corporate America, and especially Amazon, which loves to reinvest its operating cash flow in its business.
Should this happen, we could witness a rotation out of popular stay-at-home stocks like Amazon and into brand-name value plays that have been largely left behind. Finally, investors have to keep an eye on Amazon's growing competition in the cloud infrastructure space.
Now that we've taken a closer look at the many reasons Amazon's share price could head lower, let's have a look at the catalysts in its sails. According to an marketer report from March, Amazon was expected to control an estimated 38.7% of all online sales in 2020, and further boost its share by 100 basis points to 39.7% in 2021.
Like warehouse club memberships, the Prime model provides an incentive for members to stay within Amazon's product and service ecosystem. Since Amazon generates the lion's share of its operating income from substantially higher-margin cloud services, continued rapid growth in AWS is its key to expanding its cash flow.
If the company's stock were to simply hit the midpoint of its valuation range in the previous decade (30 times cash flow), it would more than double over the next three years. From its share-leading online marketplace to its superior logistics, retailers in the U.S. are going to have a difficult time competing with Amazon and luring away its users.
Even if retail margins are razor-thin, the company is more than happy to keep users loyal to its brand for the long run. I'm also very excited about the potential of AWS to triple Amazon's operating cash flow per share over the next three years.
Since Amazon is more aptly valued by its cash flow than traditional earnings metrics like the price-to-earnings ratio, its respective valuation is a lot more attractive than most folks might otherwise realize. Amazon .com Inc. (NASDAQ : AMZN) said Monday it will open five facilities in metro Detroit during 2021, including an 820,000-square-foot fulfillment center using robotics equipment to help workers pick, pack and ship out smaller items.
The other sites announced Monday includes a fulfillment center supporting same-day deliveries, a site to handle big and bulky items and two more to manage sortation and distribution in Amazon's “middle mile,” where goods move from Amazon Air hubs, gateways and fulfillment centers to be sorted by ZIP code before being transported to delivery stations or last-mile delivery partners for the final move to customer destinations. AMAZON COM INC is a component of indices, that can be found in the table below.
Sort the symbols by various financial metrics and data such as performance, oscillators and moving averages included just to name a few. Amazon (NASDAQ : AMZN) announced last week that it is buying podcast studio Wonder.
It has invested heavily in Prime Video, bought the livestreaming platform Twitch, and owns the audiobook subscription service Audible (which, confusingly, you can also listen to podcasts on). A lot of people get concerned when Amazon, a company with seemingly infinite amounts of capital, becomes a competitor to a business they own.
The company is ahead of the game with its podcasting strategy, setting itself up to be competitively advantaged, even versus a tech giant like Amazon. Over the last two years, Spotify has spent over $400 million acquiring The Ringer, Gimlet, and Par cast, three independent podcast studios similar to Wonder.
It has also signed exclusive deals, most famously with The Joe Roman Experience (the top podcast show in the world), but also with Michelle Obama and Kim Kardashian. Not only does Spotify have a scale advantage with users and a head start in owning content, but it is working to vertically integrate the entire podcasting stack.
Spotify owns Anchor and Megaphone, two of the largest podcast hosting platforms, and is building a dynamic advertising technology called Streaming Ad Insertions (SAI) to help creators easily monetize their shows. Even if Amazon, Apple, or another large company spends billions of dollars to try to compete with these tools, with high switching costs and a limited supply of popular shows, it is not something you can replicate overnight.
It has set itself up to have a major competitive advantage given the fact that it has a foothold in every part of the podcast supply chain (distributor, content, and platform), which will benefit it greatly as the industry grows over the next decade. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.
John Mickey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Julia is Africa's largest e-commerce company, operating both as a direct seller and a third-party marketplace, and it has its own logistics and delivery network.
In addition to its core in e-commerce, the company has a number of other parallel businesses, including food delivery, travel bookings, and Groupon -like deals. Founder Jeff Bezos started Amazon as an online bookseller, thinking that books would be an advantageous category for the newly emerging World Wide Web.
Julia debuted in Nigeria, and moved into countries like Egypt, Morocco, and South Africa shortly after. Despite launching in multiple geographic markets and business categories, Julia is still much smaller today than Amazon was when it was eight years old.
While many other companies claim a similar strategy, enacting it is a tall order, especially when financial statements show wide losses. Julia, for instance, professed in its IPO prospectus to “build for the long term,” but recently the company seems more concerned about profitability than growing the top line and gaining market share.
In the third quarter, its gross merchandise volume fell 28% to 187.3 million euros, as the company shifts away from one-time purchases (like smartphones) and toward repeatable categories (such as beauty, fashion, and personal care) in order to support its path to profitability. That strategy may eventually pay off, but right now Julia simply doesn't have the scale to deliver meaningful profits.
E-commerce has been a consistent growth market in the world since its inception a generation ago, and will continue to expand for the foreseeable future. However, online retail has never been an easy way to make money, and Amazon's own results bear that out.
Amazon's international e-commerce business was losing money as recently as last year, when it posted an operating loss of $1.7 billion. The company is operating in a part of the world where many of its customers don't have addresses or bank accounts, showing the challenges in building out e-commerce networks when little of the necessary infrastructure is in place.
The opportunity is appealing as the company is the leader in African e-commerce, but given the obstacles in front of it, success is far from guaranteed. Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market.
Tom and David just revealed their ten top stock picks for investors to buy right now. John Mickey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors.