The Amazon Stock in 2017
Amazon has been on a roll over the last years thanks to the continuous growth of the company and the influence of CEO Jeff Bezos, and experts such as Peter Cohan at Forbes believe that there is no reason for stock prices to go anywhere but up.
It is actually difficult no to be impressed by the performance of Amazon shares that have been up 14% from 2015 to 2016, which made the company one of the top performers in the S&P 500. Below we discuss the reasons for which Amazon shares continue to grow and why the forecast for 2017 looks rather bright.
An Expansion of Services That Leads to Company Growth
Services such as Amazon Prime and Amazon Instant Video have become increasingly popular in the recent years on a market that is constantly changing. This has resulted in soaring stock prices for Amazon, with more and more people looking to invest in tech shares lured by the promise of constant growth.
Diversification of revenue streams is key for the growth of a company of Amazon’s size, and many of the services the company offers today have been gaining more traction and pushed other Amazon services up there as well. For example, one of the most popular services Amazon offers to traders is Fulfilment by Amazon, which allows companies to store their stocks in Amazon’s fulfilment centres, which are in charge of packing and shipping the products to the end consumer.
The system works well for both sides, as entrepreneurs get access to an already-established platform without the need to create their own distribution network, and Amazon makes money by charging the companies for storage and taking a percentage of the profits.
Innovation Pushes Amazon Stocks to Sky-High Limit
Innovation is what pushes Amazon further and sends it ahead of many of its peers, which poses for a long-term guarantee of greatness. For example, Amazon is developing a variety of drones for different types of climates in the country and around the world, in order to be able to deliver its products within just 30 minutes of a customer's order placed on the website.
This type of innovation means that in the long term the company will see its shares going up. Things such as Amazon’s instant video streaming service that is offered along with an Amazon prime membership means that there are about 30 to 40 million members that subscribe to their programme just in United States. Around the world, there are around 80 million subscribers that benefit from a one-day delivery service for their products with membership and instant access to hundreds of TV shows and thousands of movies with just one click.
Cashing in on the Growth Momentum
Amazon usually gains momentum throughout the year and even if their shares may be trending lower at the beginning of the year, the low share prices means that it is a good time for investors to start buying their stock.
In the vast majority of cases, Amazon grows for consecutive years, and their revenue generally increases by over 20%. The price target of $800 per share in 2016 allows experts to believe that a larger return approximately of a $300 increase per share is expected by the end of 2017.
The average dollar volume of Amazon's $3.8 million, which means that their stock has gained a lot of trust with investors so the company is a very safe one to put your money in. with their new initiatives that happen every year, Amazon strives for an uninterrupted growth momentum that boosts their shares in a way that it is not quite possible for other tech or financial companies.
2017 Will be the Year Internet Stocks Will Outperform the Broader Market
According to an analysis by Goldman Sachs, in 2017 Internet stocks are bound to outperform the growth of the market, with several companies being on their favourite stocks for the year: Amazon.com, Alphabet (Google), Pandora, and PayPal. The reason behind this is the fact that all these companies benefit from strong growth particularly in e-commerce, which generates higher rates of returns.
To get an idea, Amazon's stock rose 11% in 2016, followed closely by Facebook with 10%, Netflix with 8.3% and Google's Alphabet with just 1.9%. Among these, Amazon distinguishes itself because it provides consumers with a wide variety of services, and that generates revenue on multiple streams, which contribute to a healthier and more constant growth.
According to MarketWatch.com, Amazon is a company with high hopes that is priced for perfection. This does not mean that volatility is not really on the cards, but overall the company is predicted to grow for the foreseeable future, so buying Amazon stock is a good investment for the years to come.