How to Buy Whole Foods Stock

An investment in Whole Foods is now an investment in Amazon. Whole Foods Market Inc. completed a merger with Amazon.com Inc. on August 28, 2017. Amazon owns more than 40 subsidiaries, making it one of the most diverse brands on the market. While you cannot purchase Whole Foods stock on its own, you can make an investment in a company that derives a portion of its value from the performance of Whole Foods.

Ready to buy stock in Amazon and everything underneath its umbrella? Get started now with our guide to buy Whole Foods stock.

How to Buy Whole Foods Stock:

• Step 1: Pick a broker. Webull or E*TRADE are good options.
• Step 2: Open a demo account to practice trading.
• Step 3: Fund your account with a debit card, bank transfer or cleared check.
• Step 4: Place an order for AMZN stock.

Overview: Whole Foods and Stock History

Headquartered in Austin, Texas, Whole Foods Market is a unique type of grocery store chain that only sells products that meet certain criteria for being “natural.” The company doesn’t sell processed food or food with artificial flavors, colors, preservatives or sweeteners. 

Whole Foods Market began when a couple of Austin natural food stores combined on September 20, 1980. The company began its expansion in 1984 with a store in Houston and fueled its growth through various mergers and acquisitions. 

The company had opened and acquired a number of stores in Texas and Louisiana by 1992, and its IPO occurred during the same year. It started selling shares at $1.06 each.

The company continued expanding by buying regional and national health food store chains, coffee companies, wine merchants and food companies. By 2017, Whole Foods had roughly 460 stores open in the United States, Canada and the U.K. before it merged with Amazon. 

The Amazon merger was a $13.7 billion cash transaction and Amazon paid $42 per WFM share. WFM stock was subsequently delisted from the NASDAQ exchange and is now listed as AMZN stock instead. 

Future Outlook for Amazon/Whole Foods

In February 2017, Whole Foods began closing stores. It began with 2 in Colorado and California and 1 in New Mexico, Utah, Georgia, Arizona and Illinois. That closure of 9 stores came in the wake of the company’s 5th consecutive quarter of declining sales. The loss of revenue from those stores gave the company an added incentive to be open to a merger, which eventually occurred later that year. 

You can’t buy Whole Foods Market stock since the company was acquired by Amazon. In order to buy an interest in Whole Foods, buy into Amazon. At the time of the takeover in 2017, AMZN stock was trading just over $845 per share. 

Since then, Amazon stock has continued to increase in value. At press time, AMZN was selling for just over $3300.

Monthly Price Chart with volume for AMZN since its purchase of WFM. Source: Tradingview.

Amazon’s financial numbers keep improving overall, which makes sense if you consider that the company has captured nearly 50% of all online sales. As the company continues to expand by purchasing and consolidating other businesses, its bottom line and stock price increase and its customer base expands.

The chart below shows how AMZN’s high price/earnings (P/E) ratio correlates with improving future net earnings, eventually bringing the P/E number down and sending the stock price higher when earnings catch up. The upward trend in trailing twelve month (TTM) earnings per share could be ripe for a correction, potentially signaling lower future levels for AMZN’s stock price. 

AMZN PE Ratio, Historical Stock Price and TTM EPS. Source: MacroTrends. 

Pros of Buying AMZN Stock

• Strong financials. Amazon’s financial statements show the company’s impressive rate of growth since 2005. In 2005 its gross profit was $2.039 billion; by 2020, these numbers were $152.75 billion.
• Continued growth. As the world moves more and more toward a digital economy, Amazon has a strong online infrastructure and a leading position reinforced by its brick-and-mortar purchases such as Whole Foods Market. 
• Highly-defensive. Because of the diversity of the company, Amazon would probably not be as affected as many other companies in different segments of the economy during a strong economic downturn.   
• Pop culture status. Amazon is so intertwined with American society that it can only rise in value. While no company is too big to fail—see the major retailers, banks, and airlines that have failed in the past—Amazon is one of those companies that will likely remain for decades to come.

Cons of Buying AMZN Stock

• Possible stock market and economic downturn: As with most equities, a downturn in the stock market and/or an economic slowdown would adversely affect AMZN stock. Nevertheless, the company has its hand in so many different businesses and industries that the effects of a downturn would probably be somewhat mitigated.
• Antitrust concerns: Amazon’s growth has made the company a true behemoth, and it has already come under the Federal Trade Commission’s (FTC) scrutiny. While the FTC has yet to move to break up Amazon, the agency recently said it was preparing an antitrust investigation into Google’s search business that could signal Amazon will be next. Also, some Democratic presidential candidates and European regulators have called for breaking up huge tech companies with a highly dominant market share like Amazon, Facebook and Google.
• Slower growth momentum: As Amazon continues to purchase and develop its assets, the company spends more and this has slowed its revenue stream growth. If this trend continues in the long term, it could adversely affect earnings and the company’s stock price. 

How to Buy Whole Foods/Amazon Stock Using a Broker

Amazon stock can be bought through any reputable broker that has access to trade stocks on the Nasdaq Stock Exchange (NASDAQ). If you plan to buy some AMZN stock to hold as an investment in a trading account for the long term, then you might want to buy it at a discount brokerage. 

A discount broker would charge you a small commission, but you would probably not get access to research and information available through a full-service broker. Keep in mind that how you buy AMZN stock is just as important as where you trade, so make sure you pick the right broker.

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Is AMZN Stock for You?

AMZN has been an amazing investment for people who bought the stock when it initially started trading in 1997 at just $18 per share. Amazon as a company teeters on the edge of monopoly status as it doesn’t truly have competitors. You might consider the companies that compete with Amazon subsidiaries to be competition, but competition between the two is not direct.

Based on the stock’s price chart, AMZN seems like it may be in a correction or consolidation phase below resistance at the psychological $2,000 level and its all-time high price of $2,039.51 per share, although the AMZN chart also shows considerable support at the $1,620 level. From a fundamental standpoint, AMZN’s stock price has diverged from its trailing 12-month EPS by failing to make a new high, suggesting additional weakness may be coming.

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