COVID-19 caused such a demand for certain products that stock prices of the manufacturers plummeted. However, companies such as Amazon.com Inc. (NASDAQ: AMZN) held up well as people increased their online purchases while isolated at home. The stock has performed well since the start of the year, demonstrating it to be pandemic proof. It was predicted that Amazon stock would hit the $4,000 mark in 2022, but that didn't happen. In fact, the stock price shrank considerably, making Amazon stock prediction analysis much more difficult.
AMZN Stock Market Position
Amazon’s market cap is estimated at $1.143 trillion, which makes it the world's fifth most valuable company. The market capitalization metric is a useful tool to gauge a company’s total value and is determined by its share price and the total number of outstanding shares. It is an important measure because it gives you a better idea of the company on a relative basis. You can think of the market capitalization as a macro indicator to gauge a company’s strength relative to its competitors. Amazon’s competitors such as eBay Inc. (NASDAQ: EBAY), Walmart Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) have a strong presence in the U.S. but cannot compete effectively at $1 or $2 margins.
Eric Sheridan’s and Brent Thill’s Bull Case for AMZN Stock
Amazon has held up pretty well in spite of supply-side challenges and bottlenecks at ports across the world. Goldman Sachs Group Inc. (NYSE: GS) analyst Eric Sheridan began coverage of Amazon with a "Buy" rating and a price target of $4,250. Sheridan is cautiously optimistic for the Internet giant and thinks the sector still has plenty of room for secular revenue growth and greater operating efficiencies in the future years as it scales up. Sheridan sees Amazon as a key long-term holding for tech investors and believes the firm has exposure to numerous long-term runways that can maintain more than 15% growth while generating long-term margin expansion.
However, the highly respected tech analyst Brent Thill of Jefferies Financial Group Inc. (NYSE: JEF) believes that focusing too much on Amazon's retail sector is unwise, given the company's other growth engines. Amazon's stock may break free from its current price target if its 3 juggernauts — Amazon Web Services (AWS), advertising, and Prime — maintain their soaring growth rates, according to bulls like Thill.
These top-tier industry analysts with decades-long experience in trading, market analysis and technology argue that AWS — as well as Amazon’s advertising and other software elements subscription models — are the most intriguing. Thill also mentioned that considering how large the similarities are, investors are concerned about the whole e-commerce industry in the immediate run.
According to Thill's newest analysis, Amazon's value has a 70% upside potential over the next 3 years, thanks to growth in AWS and advertising. By this estimate, its shares would then be worth almost $5,700, up from $3,400 now.
This analysis indicates that Amazon's market cap could exceed $3.0 trillion by 2024, not including multibillion-dollar prospects in healthcare, home security, smart-home devices or entertainment. In addition, the firm has opportunities to grow in sectors including clothing, business-to-business (B2B) and Software as a Service (SaaS). On Amazon, Thill has a $4,000 price goal and a Buy rating.
Analysts’ Bear Cases for AMZN Stock
Although no analysts have spoken out about a bear case for Amazon stock, reports pertaining to intellectual property rights breaches and product recalls have resurfaced in some major journals. Amazon could face headwinds if countries like India move to protect local manufacturers; even so, its business model is diversified enough to cushion shocks in the medium term.
AMZN Stock Price History
Following the low in March 2020, the company's stock price soared to new 12-month highs in September 2020. However, there has been little development since then. The stock reached new all-time highs in July 2021, but it swiftly returned to its usual sideways trading pattern.
Chart from Benzinga Pro- 10/20/2021
Overall, investor opinion toward Amazon is still favorable, with a willingness to purchase on dips and the $3,000 level of support providing support. However, investors may believe that equities like Amazon are properly priced at the present because of worries about how far stock markets have risen in the last 18 months.
Amazon's stock was slightly shy of $3,280 at the start of 2021. After temporarily falling below $3,000 in March, demand shot up, and by July, the price had risen to a new all-time high of $3,773.08. However, the bullish momentum was short-lived and by the end of the summer, shares had fallen below $3,200, and investors had rejected a test of $3,500 in September. This price movement implies that from the beginning of 2021 until the middle of October, Amazon's stock has only increased by 1.9%. The stock dropped 5.7% during the last year. The Nasdaq is down 31.76% in October 2022 for the year.
Amazon's once-hot stock has been anything but in 2021, as investors worry about revenues at the internet giant's main retail sector dropping this year as it compares to the start of the pandemic-fueled e-commerce boom in 2020. Its decision to hire 150,000 seasonal workers in addition to rising wage growth has caused some investor worry.
Where to Buy AMZN Stock
Below, Benzinga provides a list of stockbrokers where you can buy Amazon stock. The chart provides a good comparison to guide your decision.
How Long Will it Take for Amazon Stock to Reach $4,000?
In order to conduct a comprehensive Amazon stock analysis, potential negative consequences must be weighed with favorable ones. In 2014, Amazon's stock lost over a quarter of its value. Amazon founder Jeff Bezos conveyed a strong long-term strategy to investors, supported by his slogan of "Get Big Fast." As Amazon's quarterly earnings fell short of expectations, short-term investors rushed to sell the shares. However, despite a run, Amazon stock currently sits at $112.21.
Currency fluctuations are one of the most significant hazards. The firm must convert foreign money to its base currency, the U.S. dollar, as the worldwide market grows. Even little changes can have a significant influence on Amazon's bottom line, affecting profitability. However, most analysts argue that the stock will rise to $4,000 in the future.
Although people are glad that COVID-19 lockdowns are coming to an end, consumers found that they liked online shopping, especially from Amazon: U.S. e-commerce sales at Amazon rose from 34% in 2016 to 47% of U.S. online sales in 2020.
Another risk to consider is rising competition from small and major rivals in the online retail industry. Walmart and Target, in particular, have the financial flexibility and know-how to keep up with Amazon's initiatives. The same may be said about Amazon's ambitions in international markets where it must compete against local firms in India, which is a valuable and rapidly developing market.
During an e-commerce boom, COVID-19 lockdowns that kept individuals from leaving their homes spurred revenue growth. However, as customers return to normal, the tendency may reverse. On October 6, the business announced the establishment of its first Amazon 4-star shop outside the United States.
Amazon Is Justifiably a Wall Street Darling
Amazon is an e-commerce giant worth holding. In addition to being an investor favorite, it has strong market prospects and great fundamentals. Watch out for the $4,000 price target and potential strong buy signals.
Frequently Asked Questions
Is AMZN stock a good investment?
Amazon is one of the largest e-commerce retailers with a competitive business model that has seen its share price rise from $220 in 2012 to $3,444 on October 20, 2021. It has a large market share and offers a number of services in addition to its burgeoning development of autonomous vehicles.
Is Amazon a safe stock?
Because of the fluctuations, Amazon stock is considered a highly speculative stock. In 2020, Amazon shares hit $3,000 but just two years later, they sit as $112.21.
Do Amazon shares pay a dividend?
Amazon shares do not pay a divident. While many conpanies do issue dividends to shareholders, Amazon is not one of them.