Increasing numbers of traders and individual investors are becoming interested in the assets of major American companies among which those quoted on the Nasdaq are particularly popular. This is the case for the shares of the Amazon Company that experience major annual fluctuations and therefore enables profitable speculations over the long term.
General presentation of the Amazon Company:
The Amazon Company is well known to one and all due to its major presence on the internet worldwide. Its major activity is online book sales but over the years the Amazon Company has diversified its activity sectors and now sells all kinds of cultural products such as CDs, DVDs, digital appliances, video games, household electrical appliances and even payable music downloads.
The majority of its turnover is from the United States but Amazon has managed to conquer the world and its activity is also strongly developed in Europe. Nowadays this company is one of the world leaders in online products distribution for the general public.
Major competitors of Amazon:
The Amazon Group is undoubtedly one of the companies in the e-commerce sector that has experienced the greatest success over recent years. Due to the development of diverse products and services and using a rational mobilisation strategy that is highly progressive in the use of its resources, the group has made its mark and distinguished itself from its competitors notably through the standardisation of these procedures. This is why Amazon does not have many real and direct competitors at this time. Among the companies that try to compete however we find the following:
- Barnes & Noble Inc.
- EBay Inc which uses the same online sales model.
- Hastings Entertainment, Inc.
- Columbia House Company
- Apple Inc.
- Best Buy Co., Inc.
- Books-A-Million, Inc.
- Wal-Mart Stores, Inc.
- The Fnac is a direct competitor of Amazon in France due to its online sales platform which is greatly similar to that of the American giant.
Of course, Amazon causes great envy among would be competitors as it has shown it knows how to remain leader of its sector and is consistently highly innovative which helps it stay well ahead of any pretenders to the crown.
The major partners of Amazon:
Amazon hasn’t stopped developing new partnerships with businesses in sectors that are sometimes quite surprising. For example it signed an agreement with the Ford automobile company for the design of a device enabling the remote control of a car.
Amazon also created partnerships with Samsung in 2014 in the online content publishing sector using 4K monitors.
To conclude, in 2015 Nintendo also announced the implementation of a partnership with the Amazon Group like that of the Spanish Dia Company with whom they signed an agreement in 2016 for the online sale of their products.
Introduction and ranking of Amazon shares
It was in 1995 that Amazon was introduced to the stock market and incorporated into the Nasdaq calculation. Its results make it one of the favorite assets of traders in this sector, since Amazon makes around 35 billion dollars of turnover a year.
In just some years, the company has managed to make a profit of almost 40% compared to the previous year. Of course, Amazon suffered the consequences of the crisis and the explosion of the internet bubble in 2006 but has been able to bounce back by developing several services.
It is therefore very interesting to have Amazon shares on your stock market portfolio because of the company’s ability to target new profitable activities, but also for its successive acquisitions of companies whose activity its complementary to its own.
Important stock market information to know relative to Amazon shares:
To complete full and reliable analyses on the Amazon Company share price it is of course important to know the information given above such as the company activities, important dates and historical movements in the share price, but there are other more basic stock market details that are also necessary to know such as the following:
- The total stock market capital of the Amazon Company in 2017 is around U.S. $430,880.64 million.
- Amazon shares are quoted on the All Markets category of the Nasdaq Global Select stock market in the United States.
- The Amazon Company is also included in the calculation of the Nasdaq 100 American stock market Index in the United States.
- A large part of the company capital in terms of shareholdings is held by institutional investors including the following: Royal London Asset management, T. Rowe Price Associated, the Vanguard Group, Capital World Investors, Fidelity Management and Research Company, State Street Corporation, BlackRock Fund Advisors, Capital Research Global Investors, Baillie Gifford & Co Ltd and Jennisson Associates.
Economic and financial history of the Amazon Company:
To understand and better anticipate the movements of the Amazon Company share price it is important to know certain historical events that have marked its rise including the major acquisitions and financial investment participation. Here then are the major events to remember:
- In 1998 the combined companies of PlanetAll, Junglee and Bookpage.co.uk became Amazon.
- In 1999 Amazon purchased IMDb, Alexa, the website Accept.com, and the Exchange.com website.
- In 2003 Amazon purchased CDNow.
- In 2004 it purchased the Chinese electronic sales website Joyo.com.
- In 2005 the company purchased Booksurge, Mobipocket.com and CreateSpace.com.
- In 2006 it was the purchase of Shopbod.
- In 2007 Amazon acquired the Brilliance Audio Company and the photographic equipment website dpreview.com.
- In 2008 Amazon purchased Audible.com, Fabric.com, BoxOfficeMojo, Shelfari, AbeBooks and Reflexive Entertainment.
- In 2009 it purchased the online shoe sales company Zappos, Lexcycle and Snap Tell.
- In 2010 it purchased Touchco, BuyVIP, Diapers.com and Woot.
- In 2011 it purchased LoveFilm, Yap, The Book Directory and Push Button.
- In 2012 Amazon acquired Kiva Systems.
- In 2014 it purchased Double Helix, Colisprivé, Twitch and Rooftop Media.
- In 2015 it purchased Orbeus Inc.
More recently, in 2017, Amazon purchased the internet distribution company Souq, highly present in the Middle East, an area that the company had trouble penetrating. Amazon recently announced the acquisition of a 23% shareholding in Plug Power, an American hydrogen battery manufacturer.
The different products and services offered by Amazon:
To be able to trade the price of Amazon’s shares with CFDs, it is essential to know very good the products and services offered by this company. This is what we propose you here by entering a little bit more in detail into the activities of this company.
Amazon’s online sales platform:
This is of course the most known activity of the group. This Marketplace platform allows professional and/or particular sellers to sell their products online, provided that their products are part of the Amazon catalog. The company is remunerated for each sale made, by a commission on the selling price, fixed shipping and handling prices and a fixed commission per object sold. Of course, the site also charges a VAT in accordance to the law.
Kindle, the digital reader:
In 2007, Amazon also created a digital book reader called Kindle, which has become a real emblem of the brand. This reader can also be used as a software for computers or tablets and is of course adapted to android and apple smartphones.
Amazon also sells reading licenses of a large number of books, which allows the buyers to have access to them from different media and platforms. Of course, these files remain the property of Amazon and are not really acquired by the user, who in fact only buys the right to read and consult.
Amazon’s video service:
This is one of the biggest projects of the company. Launched in 2006, Amazon’s video service is, as its name suggests, a video on-demand platform. The objective of this service is of course to introduce the company in a market, that is increasingly growing and to compete with the big giants of this sector such as Netflix and Google.
Amazon’s video service is already available in several countries including the United States, France, United Kingdom, Austria, Japan and Germany.
Even though it has not had the expected success, this service could gain notoriety with time if it adds a more varied and complete catalog of videos and with more competitive prices.
Amazon Mechanical Turk crowdsourcing service:
Less known than the other services we mentioned above, Amazon Mechanical Turk or AMT in French is an online micro-work service based on an internet crowdsourcing platform and launched in 2005. This platform allows people who are willing to take over certain dematerialized tasks in areas where artificial intelligence is still little evolved such as the analysis of image content or the production of various information.
Amazon’s Lockers service:
Through this service, launched in 2015, Amazon is seeking once again to stand out from the crowd in the field of online selling. Amazon Lockers is in fact a service of automatic orders placed in big cities such as Paris and Villeneuve D’Ascg in France and in other cities of the United States and the United Kingdom, which allows you to pick up what you commanded on its internet platform in some shopping centers.
Amazon’s cargo services:
Always seeking to minimize the cost and to master the entire chain of sales of its products, in 2016 Amazon launched a partnership with the airplane rental company ATSG in the USA to which he rents about 20 Boeing 767 cargo for a period of 5 to 7 years. These devices are used to deliver shipments from Amazon with the goal of gradually detaching from its dependence from traditional delivery companies such as UPS and FedEx.
But Amazon has gone a bit further in this sense since the company announced in 2016 that it was in negotiations with the British government to develop a project to deliver small packages with drones. Of course, the reliability of this project is still being studied because it has to deal with many legal and logistic constraints. If this project is finally completed, it will enable Amazon to deliver small packages in less than 30 minutes everywhere around the world.
Finally, always in 2016, Amazon showed once again its creativity by filing a patent concerning the installation of flying warehouses suspended by zeppelins, in order to accompany the delivery service of packages by drones.
The Amazon Go magazines:
In 2016, Amazon acted once again as a pioneer in the sector of automated work by launching the first food supermarket without a cashier in Seattle and it was called Amazon Go. This supermarket, first of its kind, is still being tested since it was created for and can only be used by Amazon’s employees.
Amazon Textiles clothing:
Thi is another sector in which we did not expect the giant Amazon to go in. The latter has indeed launched two textile brands with Goodtgreads and Paris Sunday, which are only sold online for the moment.
What are the advantages of Amazon’s shares as a stock market asset?
- First, let’s remember that Amazon has the status of international leader in online selling, far ahead from its competitors. But that’s not all! In fact, the group is constantly seeking to expand the range of products it sells online and thus strengthen the presence of the platform on all sectors. In order to do this the company does several strategic acquisitions every year.
- In addition, Amazon and its brand Kindle has gain several market shares in the sector of digital books right now.
- In the near future, Amazon shares could benefit from several interesting factors, such as the increasing augmentation of its online sales. The company could also benefit from the growth of its online advertising and from a high demand of books and electronic tablets.
- The development opportunities of the company are thus very strong, especially since Amazon is able to constantly diversify and always innovate in order to remain number one and ahead from its competitors.
The disadvantages of Amazon as a stock market asset:
Of course, trading Amazon shares does not present only advantages for investors and the value has some flaws which are minor when compared to its numerous qualities, but they must nevertheless be taken into account.
Among some of the biggest weaknesses of Amazon we can list some problems related to the infringement of patents, which have been influencing the trust of investors for some time. The reliability of Amazon’s online platform, which has a tendency to go down regularly, is a recurrent problem that could worry the market.
Amazon also faces other important threats, including the collection of taxes on merchandises sold on the platform and reducing the margins by decreasing the competitiveness of the group.
Amazon also faces increasing competition in the sector of digital books with numerous newcomers every year trying to become part of the market.
Finally, the risk of exchange rate fluctuations could, depending on market conditions, slow down the company’s profitability internationally.
In conclusion, Amazon’s strengths outnumber its disadvantages, the company remains one of investor’s favorites shares at the moment.