Key points
- Amazon is the market leader in e-commerce and cloud services.
- Investments in fulfillment infrastructure have impacted profit numbers.
- AI, advertising and cloud services could help Amazon’s growth rebound.
Amazon has been one of the best-performing growth stocks ever since its initial public offering in 1997. It has also maintained strong share price appreciation in the past few years.
The e-commerce company has a long history of innovation and successful investing in game-changing technologies. Amazon’s next growth opportunities may come from its expanding advertising business or artificial intelligence investments.
Amazon stock price
Amazon stock traded at around $180 per share at the beginning of June 2024.
The company split its stock 20-for-1 in June 2022, when it sold for around $120. Before the split, Amazon stock sold for more than $2,000 per share.
Despite the strong past performance of Amazon stock, some analysts believe it’s fairly valued. Developments in key growth areas, including Amazon Web Services and advertising, may influence future share price movements.
How has the Amazon stock price performed?
Amazon stock has performed exceptionally well since the company’s founding, delivering consistent, strong growth. But it has had ups and downs. For example, its value dropped nearly 50% in 2022.
The stock has sharply rebounded, returning to its 2021 price. Buy-and-hold investors haven’t been disappointed.
Amazon is committed to improving its retail operations. Many customers have grown accustomed to free two-day shipping with a Prime subscription. But the company has strived to beat that. In March 2024, nearly 60% of Prime members in the 60 largest U.S. metro areas received orders the same or next day.
Amazon earnings
Amazon’s revenue was $143.3 billion in the first quarter of 2024, up 13% from a year ago. Net income was $10.4 billion, up 229% from the previous year. Total operating expenses were $128 billion, up from $122.5 billion in 2023.
Net cash flow is another notable improvement for the company. It increased 82% to $99.1 billion for the trailing 12 months. That compares to $54.3 billion for the trailing 12 months ending March 31, 2023.
Amazon beat earnings per share estimates in the first quarter of 2024. It posted an EPS of $0.98. The expected EPS was $0.83. It also beat revenue projections. The expected revenue was $142.5 billion.
Amazon at a glance
Amazon had humble beginnings. Founder Jeff Bezos launched the company from his garage in 1994. It was originally an online bookstore. But you can now buy nearly anything on Amazon.
Today, Amazon is a multinational technology company focusing on e-commerce, cloud computing, online advertising and digital streaming. It has acquired several notable companies, including Whole Foods, Twitch and Ring.
Amazon’s popular Prime service has around 180 million active members. In the first quarter of 2024, about 42.5% of Amazon’s revenue came from retail. The rest came from services, with the company profiting largely from AWS sales.
Amazon controversies
Amazon has been involved in several controversies. Many center on allegations of unsafe working conditions.
Amazon has also been accused of discouraging workers from supporting unions. This includes tactics like surveilling workers and firing union organizers.
Other allegations say Amazon has acted as a monopoly. In 2023, the Federal Trade Commission and 17 state attorneys general sued Amazon. The lawsuit alleges that Amazon stifles competition on price, product selection and quality, ensuring rivals can’t threaten its dominance.
Amazon IPO
Amazon went public in May 1997 with a share price of $18, or $0.075 adjusted for future stock splits. This was early in the company’s history, when it called itself “an online retailer of books.” It claimed to offer 2.5 million titles.
Amazon launched shortly before the dot-com bubble and survived when other companies didn’t. But its share price dropped significantly. It went from a split-adjusted price of nearly $5 in December 1999 to about $0.50 by March 2001.
From that low point, Amazon shares grew at a modest pace. They began seeing more rapid growth around 2015. This coincided with AWS and other revenue streams, such as advertising and AI, taking off.
Amazon stock splits
Amazon has split its stock four times. The first was a 2-for-1 split in June 1998. The second was a 3-for-1 split in January 1999. The third was a 2-for-1 split in September 1999.
The company didn’t split its stock again until June 2022, when it split 20-for-1. The share price was over $2,000. The 20-for-1 split made the price more manageable.
Amazon stock split history
Opportunities and obstacles facing Amazon
This is an interesting time for Amazon, as it faces many opportunities and obstacles. For example, it can expand its business into new markets. These include regions like South Africa, where online shopping launched in May 2024.
But the company also faces increasing regulatory scrutiny from governments concerned about Amazon becoming a monopoly. This could hinder its expansion capabilities.
Many new technologies, such as AI and machine learning, can help Amazon automate and streamline its business. For example, warehouse robotics and automation can help cut costs and increase efficiency.
But Amazon also faces increased competition from companies like Walmart. While it has a dominant position in e-commerce, Amazon must constantly innovate to stay ahead.
Strengths
- Massive warehouse network, delivery infrastructure and efficient logistics give it an edge over the competition.
- Consistently invests in R&D, including in key areas like AWS and its AI-powered product recommendations.
- Has expanded to offer several profitable services, such as AWS and advertising, in recent years.
Weaknesses
- Sells goods from a large number of third-party sellers. This increases the risk of quality issues and counterfeit items.
- Faces intense regulatory scrutiny due to its rapid expansion, which could hinder future growth.
- Could stretch itself too thin when expanding into new markets, reducing efficiency and profitability.
Nasdaq: Amazon comparison
Amazon is one of the top stocks in the Nasdaq composite index, with a weight of 7.06% as of March 28, 2024.
The table below orders by market cap the 10 stocks with the greatest weighting in the Nasdaq. It’s reordered daily at market close.
Amazon stock forecast 2024
Amazon’s stock price has seen a resurgence in 2023 and 2024, rising from its split-adjusted low of $84 at the end of 2022 to around $180 in early June. Will the stock keep rising in 2024?
Amazon stock continues to be fueled by AWS’s growth. In Amazon’s first-quarter earnings report, CEO Andy Jassy said the service is on pace to reach $100 billion in annual sales.
Amazon stock’s one-year price target is around $220. In other words, the stock could reach a new high. But it also sells at a fair value. So it may not represent a strong buying opportunity.
Amazon stock forecast 2025
Amazon’s revenue could be as high as $821.5 billion in 2025, compared to $574.8 billion in 2023.
Amazon stock increased more than 40% year over year as of June 5, 2024. But it isn’t guaranteed to continue rising at this pace.
Some predictions of Amazon stock suggest it could reach about $230 per share by the beginning of 2025.
What can we expect in the coming years?
Amazon struggled to profit in 2022, contributing to its falling share price. Its net profit has been above 6% in the last few quarters. Maintaining a healthy profit will be key to more growth in its share price.
Several factors can help Amazon remain profitable in the years ahead. For instance, if AWS maintains dominance in cloud computing, it could boost Amazon’s stock price. Other key factors include the company’s ability to expand its e-commerce business into new markets. Increasing efficiency through robotics and automation also can help cut costs.
There are many moving pieces. Amazon may continue facing regulatory scrutiny and union pressure. Investors may be rewarded if Amazon can navigate obstacles while growing key parts of the business.
Frequently asked questions (FAQs)
Analysts generally give Amazon a price target of around $220. Of 65 analysts, 54 issue a “buy” recommendation, three say to hold and none recommend selling.
Amazon reached an all-time intraday high of $191.70 on May 9, 2024.
Amazon stock has split four times: once in 1998, twice in 1999 and once in 2022. The first three splits were 2-for-1 or 3-for-1. The most recent split was 20-for-1.
Amazon stock does not pay dividends. But companies like Google and Meta recently started paying dividends. This could put pressure on Amazon to pay dividends in the future.
