Finding someone who has never heard of Amazon would be a hard task in 2019. As one of the infamous FAANG group of technology giants, Amazon attracts the attention of hundreds of thousands of international investors each year.
Amazon (AMZN) is one of those stocks that investors just love. The e-commerce company seems to be everywhere - clothing, cosmetics, media devices, food, web services and more - offering goods to cover almost every aspect of consumers’ lives.
Antitrust probe worries, political criticism, disappointing quarterly reports, closure of its Chinese business segment and volatile equity markets have all added fuel to the fire.
But with 2019 coming to an end what does the Amazon share price forecast for 2020 and beyond look like? What is the Amazon stock: buy or sell?
At a glance: US retail industry overview
To predict the future of Amazon, it is important to consider the environment in which the business operates.
2018 was a complex year for the retail industry. The US saw robust economic growth and a record-breaking holiday season, but there were also mixed retail earnings and some high-profile bankruptcies. All of this happened against a background of global trade tensions and political uncertainty. Despite this though 2018 saw retail sales hit a record high of $6tr.
The industry is undergoing major transformations. The shift from a bricks-and-mortar past to a digital future is unstoppable. And while some players that understand the change will thrive, retailers that do not are likely to meet the same fate as the now defunct Borders or Blockbuster (the latter having just one private franchise store remaining in 2019).
In addition to this online revolution, changes in consumer spending have also had a key impact on the retail industry in 2019. Despite high levels of employment and increasing disposable income, consumer confidence remains weak in the face of increasing economic uncertainty around both US-China trade wars and developments in Federal Reserve policies.
US retail sales fell for the first time in seven months in September. Ian Lyngen, head of rates strategy at BMO Capital Markets, said: “While this is by no means conclusive evidence that the consumer is wavering, it nonetheless reinforces our ongoing concern that a spending retrenchment will ultimately trigger a more durable slowdown.
Amazon’s enduring appeal
In short, it seems that Amazon knows exactly what to do. Very few companies can boast the huge array of opportunities that Amazon has created for itself.
Changing the entire retail experience and consistently dominating the digital space, the company leads the ranking of the most popular online marketplaces in the US. Over 206 million people from around the world visit Amazon every month.
The company is now exploring the healthcare segment, having acquired PillPack, an online pharmacy company, for just under $1 bn last year.
The company also continues to invest heavily in transportation, cloud computing, artificial intelligence, video content and online video services, competing against Microsoft, Netflix and other major players.
Not all of its ventures succeed, but the company is nevertheless willing to take bold steps that sometimes turn into big winners. Amazon Web Services (AWS) is one of those successes.
AWS is now a highly profitable market leader in cloud-based computing services. In the third quarter of this year, it contributed 71 per cent of Amazon’s total operating income and 13 per cent of its total revenue.
In September 2018, Amazon became only the second company to hit $1tr in market capitalisation, close on the heels of Apple Inc, which had celebrated this important milestone only a month earlier.
Amazon stock price analysis: success through the years
Let us have a look at the Amazon share price trend since the company’s IPO in 1997.
In 1997, when Amazon first went public, its stock was priced at just $18 per share. The retailing giant has seen its stock skyrocket, despite the difficult times caused by the dot-com crash.
Over the years, the Amazon share price trend has been mainly upwards. The company’s success has attracted impressive buying interest, generating steady upwards movement that continued to hit a record-high of $2,050.50 on September 4, 2018, before dropping back to $1,870.32 on October 10. The high of $2,050.50, represented share price growth of over 11,200 per cent from its IPO.
The price hit another bottom of $1,340 per share in December 2018. The picture since has been one of many ups and downs, characterised by multiple price fluctuations.
According to the latest Amazon stock review, the company’s shares sank as much as 8.62 per cent in after-hours trading immediately after its third-quarter earnings report was released.
At the time of writing, with a market capitalisation of almost $869.19bn, the Amazon share price traded at $1,753.
Amazon’s recent performance
As with any other stock, there are several factors influencing the Amazon share price. The most crucial influences include quarterly earnings announcements and the financial performance of the wider stock market.
In its third fiscal quarter of 2019, the company reported its lowest net income since early 2018. When compared year-on-year, revenue was up nearly 24 per cent to $70bn, while profits fell almost 26 per cent, a drop to $2.1bn.
Looking forwards, the company expects its fourth quarter revenue guidance to be in the range of $80bn to $86.5bn - representing a growth between 11 per cent and 20 per cent, which is below analyst estimates of $87.4 bn. The consensus on adjusted earnings is down 33 per cent to $4.06 a share.
How do these figures reflect on the Amazon stock forecast?
Amazon stock price prediction: is it set to skyrocket in the coming years?
There is no doubt that the ongoing talks about antitrust allegations and overall performance of the industry may have an impact on Amazon’s business image and value. But, will these issues really affect the company’s share price in the long-term?
Many experts believe the retail business will keep expanding and that investors will be pleased to hear more stories about Amazon’s new conquests in exciting growth areas - from advertising to cloud computing to artificial intelligence. Each of these, they believe, could add substantial value over time.
Let us check out what the latest Amazon share price prediction looks like.
Online forecasting service Longforecast.com, predicts that the company’s stock will experience a long-term increase, with the Amazon shares trading at $2,398 by November 2021.
Another forecasting service Wallet Investor has also taken a bullish stance, referring to the company's stock as a “very good long-term investment”. Its outlook sees Amazon stock expected to trade at $3,841 by November 2024, meaning that an investment today, would see revenue at around +119.37 per cent in five years.
Here is what their long-term AMZN stock prediction looks like today:
According to CNN Business, 44 analysts have offered their own 12-month Amazon stock price outlook. They have set a median target of $2,200, with a low estimate of $1,900 and a high estimate of $2,573.
Gov Capital offers the most optimistic outlook of all, stating that Amazon stock is set to reach a price of $10,720 by mid-November 2024.
With Amazon stock price prediction 2020 looking promising, millions of investors now await for the next financial report with bated breath, keen to see whether the company will be able to live up to these high expectations.
The bottom line
So, should you buy Amazon stock before this year comes to an end? Will shares go up or down? Well, just as with any other investment, there is no guarantee of financial success. Nevertheless, according to the latest Amazon stock trend analysis and forecasts, the chances are that the company could bring substantial growth to your portfolio in the next two years.
If you think you are not ready to make long-term investment commitments, but you still want to try to profit from the price volatility, you can do so through contracts for difference (CFD) trading. Learn more about CFD trading with free online courses provided by Capital.com.
So, what are your bets on the Amazon stock forecast? Will Amazon shares go up or down?
You can make your own predictions based on the latest Amazon performance by checking out our comprehensive up-to-date chart.
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