Everything You Need to Know About Amazon Stock

Easily purchase Amazon Stock today by opening a brokerage account with Interactive Brokers.

Unmistakably one of the most successful companies of our time (and arguably in the history of entrepreneurship), Amazon.com Inc. (NASDAQ: AMZN) is one of the world’s most valuable public companies. While amazon has revolutionized how people buy what they need, the company has gone out of its way to change the way the public accesses a great many products and services. As a result, the firm is more in the public eye than ever, and it may not stop any time soon.

Amazon at a Glance

Amazon’s historical trajectory and double-down launch toward success are corporate legend. Amazon, founded as an online book-selling company in 1994 out of Jeff Bezos’s garage, rolled out its IPO in 1996.

It began expanding internationally in 1998 and it continued to build its fulfillment center infrastructure. From there, Amazon continued growing at a pace unmatched by any other company.

In 2006, Amazon plowed through the $10 billion mark. More than just a few things contributed to Amazon’s success story in the late 2000s, but a couple of major innovations included:

• Amazon Web Services (AWS) for public usage
• Kindle unveiled
• AmazonFresh and Amazon Music

In the 2010s, a few more things contributed to Amazon’s upward swing:

• Amazon Prime Video (released in 2011)
• Cloud computing area with Amazon AWS
• Crowdsourcing with Amazon Mechanical Turk
• Amazon Restaurants
• Streaming services like Amazon Music and Amazon Video
• A cashier-less grocery store was added to Amazon’s arsenal

Amazon reached a $1 trillion market cap on September 4, 2018 and marked 25 years in business on July 5, 2019.

Moreover, Amazon has surpassed Walmart as the largest retailer outside China, and the firm is the 2nd-largest private employer in the United States.

Pros of purchasing Amazon stock:

• Jeff Bezos, CEO of Amazon, is a major pro himself. He’s a founder who runs his own company, invests in growth opportunities, leads gigantic markets and attracts and motivates talented individuals.
• Amazon's diversification keeps exposures wide, from cloud computing to advertising to global e-commerce.
• Has a willingness to dip its toe into a wide range of industries and sees opportunities in online shopping.
• Even though Jeff Bezos is stepping down of CEO, there is much praise as he headed into space in the coming weeks.
• Potential oppourtunity for amazon to invest in space technoloy and join in on another huge sector.
• Amazon is almost a default place to make purchases—for individuals and businesses alike

Cons of purchasing Amazon stock:

• It’s pricey. As of July 7th, 2021, AMZN opened at $3,700.63per share.
• Amazon faces increasing direct-to-consumer online sales competition.
• The company faces overvaluation and regulatory risks.
• Jeff Bezos is stepping down as the CEO.

How to Purchase AMZN Stock

While you cannot buy Amazon stock through a direct stock purchase plan, you can choose a brokerage firm to purchase AMZN. Here are some general guidelines for purchasing stock. 

Step 1: Determine How Much You’d Like to Invest in AMZN

Generally speaking, you should only invest an amount you could afford to lose. Stocks can be volatile and it’s easy to lose money, even with a powerhouse like Amazon.

Step 2: Choose an Online Broker

Once you’ve determined how much you’d like to invest, you can contact a broker and sign up for an account, fund the account, then place a “buy” order on the stock.

You can also sign up for an online broker and apply for an account, fund the account, and buy AMZN through the broker's online interface.  Don’t have a broker? Choose from one of Benzinga’s top online stock trading brokers. Here’s a quick look at our favorites below.

Step 3: Buy the Amount of AMZN Stock You Want

There are generally two types of “buy” orders: market order and limit order. A market order will execute the purchase at the present market price, while a limit order will only execute if the price falls at or below the limit price.

Although a limit price might give you a lower price of entry, there is no guarantee that the limit order will execute.

Future Outlook for Amazon Stock

It took seven and a half years for Amazon to reach $1,000 from $100 and it’s very possible that it could hit $10,000 between 2023 and 2025. Amazon’s potential to grow could continue over time. While the drama concerning Jeff Bezos’ new yacht in the Netherlands has soured public sentiment for the man, the company itself appears to be almost untouchable.

Is Amazon Right for Your Portfolio?

It’s a nerve-wracking possibility to buy an overvalued stock, or one with a current price that is not justified by its earnings outlook or price-earnings (P/E) ratio. Is Amazon one of those?

There’s heated debate on both sides of the spectrum, that Amazon will not be able to sustain its current rate, or that it will be subject to price-earnings contraction. In addition, it’s possible that investors could become less enamored by Amazon’s future growth possibilities.

Furthermore, you can find less expensive ways to load your plate with e-commerce and cloud trends. Buy during price drops if you're worried about overpaying for shares.

Amazon Stock Split

The Amazon.com Inc. (NASDAQ: AMZN) stock split has been one of the most eagerly anticipated by investors. So when the tech giant announced its first stock split since the dot-com boom, it was greeted with a lot of enthusiasm.

Tech companies like Apple Inc. and Tesla Inc. have leveraged stock splits to reignite retail interest in their stocks. So Amazon investors hoped that a split would generate momentum in the stock, which had been struggling to replicate its 2020 performance.

But how has the stock split changed the face of investing in Amazon and the tech sector in general? Read on to find out. 

What Happened During the Amazon Stock Split?

Amazon announced a 20-for-1 stock split in March. This was the company's first since 1999 and its fourth since it became a publicly traded company in 1997. The announcement was received with a lot of positive sentiment from investors. Shares of the e-commerce company spiked 6% in extended trading the day the announcement was made. 

It took Amazon a few months to navigate the procedure and obtain permission at its annual shareholder meeting because the split needed shareholder approval. As soon as Amazon received the all-clear, the stock split went into effect in early June.

Since the split on June 3, shares of Amazon have plummeted, falling by about 24% from when it split its stock. 

This has largely been attributed to the market sell-off caused by the Federal Reserve’s interest-rate hike and growing anxiety that the economy is heading into a recession. Technology stocks have been hit the hardest by the sell-off, and Amazon has taken its fair share of the battering. 

The company's fundamentals this year also have been a little shaky. The company experienced its first slowdown in quarterly revenue growth in decades earlier this year. This dampened investor interest in the stock and pushed its valuation below $1 trillion for the first time since 2020.

Year to date the stock is down by 44% and is on pace for its worst year since 2008. It is currently the second worst-performing FAANG stock behind Meta Platforms Inc., which has declined by over 70% so far this year. FAANG is an acronym that refers to the stocks of the prominent technology companies Meta Platforms Inc. (formerly Facebook) Amazon, Apple, Netflix Inc. and Alphabet Inc.

The long-term prospects for the stock and company remain bright. Its cloud business continues to record significant growth, while the company still remains the undisputed leader in global e-commerce. 

Why Did Amazon Split Its Stock?

Stock splits are mainly cosmetic and do not add any intrinsic value to the shares. If executed well, they can help the long-term prospects of a stock in terms of performance. Amazon may have decided to initiate a stock split at the time it did for a few reasons. 

First, stock splits are becoming a trend among tech companies. Apple, Tesla and Google are among the tech companies that have issued stock splits. These stock splits are usually done to generate retail interest in the stocks considering that these tech companies have seen their shares grow astronomically since the pandemic. As such, some of them are seen as being pricey and out of the reach of the retail investor. This in turn affects interest and trading activity on the stock.

If you consider Amazon’s stock performance in 2021, you can see why a stock split was a viable option. In 2021, Amazon was the worst-performing FAANG stock, returning only 2.4% for the year. There were signs that retail interest in the stock was waning — especially when compared to other FAANG stocks like Apple and Google, which returned 33.82% and 65.3%, respectively. 

Also, the timing of the stock split coincided with when the company first reported its slowest rate of growth for any quarter since 2001. Considering that this was a fundamental reason for investors to further abstain from investing in the stock, a stock split seemed like a timely intervention to generate retail activity. Some analysts believe the stock split was a distraction from the state of the company's business.

A stock split could make Amazon eligible for inclusion in the Dow Jones Index. The index is made up of the 30 most-valuable companies trading on U.S. exchanges. But because the Dow is a price-weighted index, Amazon cannot be included because of its high share price. 

A price-weighted index means that each company in the index makes up a fraction of the total index proportional to that company's price. Given Amazon's share price before the stock split, this would skew the balance of the weightings in the index, which would lead to wrong readings from the index.

Following its stock split, there is a high possibility that Amazon could be included in the blue-chip index in the next round of inclusion. 

How Did Amazon Perform After Its First Stock Split?

Amazon's first stock split took place on June 2, 1998, a little over a year after it became a publicly traded company.  The 2-for-1 saw Amazon stock increase by 966.39% that year. The following year (1999), Amazon stock returned 42.18%, with the company’s valuation hitting more than 50 times its initial public offering (IPO) value in December 1999.

The implosion of the dot-com bubble in 2000 crashed the stock. ​​Amazon's stock plummeted, losing about 90% of its value for the next two years. Since 2002, Amazon has had only five negative yearly performances, with the stock returning 30,716%. 

What Does the Amazon Stock Split Mean for You?

The Amazon stock split suggests that the stock would be cheaper for retail investors. Before the split, Amazon stock traded at $2,447. After the split, each Amazon share traded for $122.35. 

A stock split does not suggest any fundamental change to the business. It is merely a dilution of ownership and does little to affect the value of shares owned. In reality, it may be a public relations stunt by the company's management to reignite retail interest in the company's stocks.

The company still has good long-term prospects for shareholders. The huge spike in its stock price in late July corresponds with the release of its quarterly results, which has reassured investors of the company's long-term strength.

Amazon Stock Predictions 

A project that started in a Washington garage blossomed into the largest e-commerce company globally, with a market cap of $1 trillion. Amazon.com Inc. (NASDAQ: AMZN) is the fifth most valuable company by market capitalization and a stock that provided early investors with massive returns. 

In Amazon’s early days, critics doubted that Jeff Bezos’s strategy of delivering books to anyone and anywhere would succeed against major bookstore chains. Despite a gloomy outlook, Amazon expanded its market share in the 90s, resulting in the stock’s upward trajectory. 

Considering the market’s tumultuous performance over the last two years, investors are wondering how Amazon’s stock will perform in 2023. Let’s explore Amazon’s stock history and the different stock forecasts by analysts. 

Amazon Stock History

Jeff Bezos founded Amazon in his Bellevue garage in 1994. The company started as a bookseller but branched out into cloud computing, online advertising, digital streaming and other services.

Amazon held an initial public offering (IPO) on May 15, 1997. Since then, the company held four stock splits. The first stock split was a 2-for-1 in June 1998. 

As Amazon’s revenue grew from $15 million in 1996 to $148 million in 1997, its stock began climbing. The stock eventually surged from $0.29 in January 1998 to $5.65 in December 1999.

During 1999, Amazon held two stock splits — a 3-for-1 split in January 1999 and a 2-for-1 split in September 1999.

Amazon’s Stock Price via Benzinga Pro

At the end of 1999, Amazon’s stock had formed a double top chart pattern (reversal pattern) and began making lower lows as the peak of the dotcom bubble approached in March 2000. The stock crashed to $0.29 in October 2001.

The stock began its recovery immediately, eventually climbing to $3 in October 2003 and then to $5 in October 2007. A crash followed, and Amazon’s stock reached $1.70 during the 2008 global economic crisis.

The price made a v-bottom on the chart (reversal pattern) in November 2008, signifying a potential bull run. That came to fruition, as Amazon’s stock surged to $101 in October 2018 before a quick retest to $65 in December 2018.

Amazon’s Stock Price via Benzinga Pro

A consolidation followed the retest, but the stock broke out of a range in April 2020 to eventually set an all-time high (ATH) of $188 in July 2021.

Amazon’s stock price consolidated for several months at the top before making lower lows at the end of 2021.

Frequently Asked Questions