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Amazon Could Grow Faster Internationally Than It Did In The U.S.

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Amazon Could Grow Faster Internationally Than It Did In The U.S.
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Amazon.com, Inc. (NASDAQ: AMZN) has all but conquered e-commerce in the United States.

The next plausible step in its plans to take over the world: international expansion.

Similar to Netflix, Inc. (NASDAQ: NFLX), which gained a loyal membership base and traction domestically over several years before it began capturing membership growth overseas, Amazon’s international expansion could be a $50 billion hidden gem for the company, Loop capital analyst Anthony Chukumba said in a Nov. 1 note.

International Sales Up 29%

Netflix’s international net subscriber additions came in at over five times that of domestic additions, at 4.45 million in the most recent quarter.

Amazon is already doing well internationally, with net sales up 29 percent year over year in the third quarter.

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Still, Amazon remains committed to improving its international logistic capabilities and prime benefits to offer faster shipping and better fulfillment. The concern up to this point was that Amazon’s membership program overseas was not up to par with its United States offerings.

With Amazon’s name recognition, Chukumba said the company won't be starting from scratch in a new market and said international operations “are poised to catch on much faster than the U.S. business did.”

In the near term, international is unlikely toi be a significant contributor of profit for the company, the analyst said. Chukumba maintains a Buy rating with a $1,300 price target for Amazon. 

With robust cash flow, acquisitions certainly could be a part of Amazon’s international expansion plans to buy itself into new markets. Earlier in the year, Amazon acquired e-commerce platform Souq, in its efforts to capture the Middle Eastern market.

While far and away the e-commerce leader domestically, Amazon will face tougher competition worldwide, with Alibaba Group Holding Ltd (NYSE: BABA) also entering new markets beyond its home field in China, particularly in South-East Asia.

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Photo courtesy of Luisangelzas/Wikimedia. 

Latest Ratings for AMZN

DateFirmActionFromTo
Dec 2017Evercore ISI GroupInitiates Coverage OnOutperform
Dec 2017Moffett NathansonInitiates Coverage OnBuy
Nov 2017NomuraMaintainsBuy

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