3 Reasons Amazon (NASDAQ:AMZN) Stock is a Buy
For a powerhouse company like Amazon (NASDAQ:AMZN) that has revolutionized the way that people shop and delivered incredible earnings performance for...
Grow Your Business, Not Your Inbox
5 min readThis story originally appeared on MarketBeat
For a powerhouse company like Amazon (NASDAQ:AMZN) that has revolutionized the way that people shop and delivered incredible earnings performance for the last few quarters, it’s a bit strange that its stock has gone nowhere in the past year. Sure, there have been opportunities if you like to trade the ranges, but the fact that the stock has been consolidating in a huge channel for quite some time now has certainly frustrated long-term investors. With that said, the story behind Amazon has not changed and there are still plenty of reasons to be bullish about the long-term prospects of this internet & direct marketing retail giant.
Investors should take notice as the stock has started to act better in recent trading sessions. With CEO Jeff Bezos soon to be replaced by Amazon Web Services head Andy Jassy, the company could be poised for big things going forward. There’s also a chance that a huge breakout is on the horizon, which means that the stock might be a smart add at this time. Let’s take a deeper look at 3 reasons why Amazon stock is a buy below.
The King of E-commerce
You are probably already familiar with Amazon’s business model, as the company started by selling books online and has since pivoted to tons of other product categories. Consumers can literally find anything on Amazon’s e-commerce platform, and Amazon's logistics network is simply unparalleled. While the company certainly benefitted from COVID-19 lockdowns in the short term, Amazon still has plenty of room to capture market share and grow going forward. That’s one of the big reasons to consider adding shares at this time.
It’s safe to say that Amazon is the king of e-commerce, and the secular shifts in consumer behavior are here to stay. The company’s Prime membership platform is a true competitive advantage in the crowded e-commerce industry, and the fact that Amazon continues to put up incredibly strong growth numbers tells us that it won’t be dethroned from its leadership position anytime soon. Just look at what the company did last quarter, which included 44% year-over-year sales growth to $108.5 billion, for confirmation that there’s still plenty of upside potential here.
Prime Day Coming Up
As we mentioned earlier, Amazon’s Prime membership platform is a major differentiator and has played a key part in the company’s massive success in the e-commerce space. Investors should be interested in the stock right now thanks to the company’s upcoming “Prime Day”, which is scheduled for June 21-22. This is one of the largest shopping events of the year and should help the company generate another massive quarter of sales, given that there are tons of deals for Prime members to take advantage of.
Prime Day has been a huge success for the company in the past, as it allows the company’s 150-million-plus Prime members to take advantage of low prices on some of the most in-demand brands and items. Amazon is able to offer top products at low prices thanks to the companies huge scale, purchasing power, and vertical integration, which is a great reason why it’s a company to add for the long-term. A strong showing on Prime Day is very likely, and the numbers that come out following the event could be a bullish catalyst for the stock price.
Potential Winner of the Streaming Wars
A few short years ago, Netflix was the only game in town if you were interested in streaming video content. Since then, plenty of competitors have arrived to take market share away, and that includes Amazon with its Prime Video streaming platform. There is a good chance investors are underestimating Amazon’s potential to come out on top in the highly competitive streaming wars, which is another strong reason to consider adding shares at this time.
Amazon recently announced that it will be acquiring MGM for $8.5 billion, which will immediately make a positive impact on the company’s Prime Video library. The acquisition should be viewed as a statement of intent by Amazon to become a true leader in the streaming space, as MGM will add tons of successful entertainment franchises to the company’s arsenal. MGM owns successful franchises including James Bond, Rocky, and The Handmaid’s Tale, and has a catalog of over 4,000 movies and 17,000 TV episodes, which is clearly a huge boost to the company’s streaming library. Consider the fact that Amazon will be able to create original content under those franchises going forward to further grasp the impact of this strategic move.
Amazon.com is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.