How to Buy Amazon Stock

Unmistakably one of the most successful companies of our time (and arguably in the history of entrepreneurship), Amazon.com Inc. (NASDAQ: AMZN) has hit some major milestones over the past few days. In January 2019, coming off of the holidays, the company’s stock market value reached $737 billion, surpassing Microsoft as the world’s most valuable public company. Buy Amazon Stock

Amazon at a glance

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

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 the late 2000s, but here are a couple of major innovations:

• Amazon Web Services (AWS) for public usage was created.
• Kindle was unveiled in 2007.
• AmazonFresh and Amazon Music were created.

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 was created
• Streaming services like Amazon Music and Amazon Video
• A cashier-less grocery store was added to Amazon’s arsenal

Check out the CNBC video of Amazon’s most successful Prime Day to date.

History of AMZN

If you had invested a small amount (around 100 shares) in Amazon’s IPO, that investment, which doesn’t count reinvested dividends, would have been worth nearly $117,000 at the July 11 close price of $1,755 per share. Amazon went public on May 15, 1997, and the IPO price was $18. Amazon’s stock splits were part of Amazon’s history and contributed to its trajectory as well. The company’s board of directors increased the number of outstanding shares by issuing more shares to current shareholders on the following dates:

• June 2, 1998 2-for-1 split
• Jan. 5, 1999 3-for-1 split
• Sept. 2, 1999 2-for-1 split

Check out information about Google’s stock split on Benzinga for another perspective on stock splits.

Why purchase Amazon

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. That’s an excellent reason to invest in a company.
• Amazon has an obsession with customer service, which will sustain the company.
• Has a willingness to dip its toe into a wide range of industries.
• Amazon Web Services produced $1.4 billion worth of operating income, showing that Amazon is able to maintain its pricing power.

Cons of purchasing Amazon stock:

• It’s pricey. As of January 8, 2019, AMZN opened at $1,665 per share.
• Amazon is huge, which, in ways, makes it risky to manage as the individuals at the top may not be able to manage everything at the bottom, and those at the bottom are typically the individuals who directly deal with customers.
• It has over $119 billion worth of obligations it will have to meet in the future.

How to purchase AMZN

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: Determine the 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, and 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 their 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.

Knowing Amazon’s historical upward trend and its potential for the stock to reach the $2,000 mark even before the end of 2018, it’s a “buy now” rather than “wait” approach, as Amazon’s potential to grow could continue over time.

Final thoughts

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. There are fears 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.

As we all know, predicting future performance based on the past is a bad idea, and that’s why it’s incredibly important to know as much as you can (including information about Amazon’s future business model) to determine whether Amazon stock’s value will continue to compound.