7 Great Reasons to Buy Amazon Stock in 2022
Nova Reyes
Markets Navigator
TL;DR
Investing in Amazon stock is appealing due to its strong market position, growth potential, and the increasing popularity of online shopping. The company's diverse business model and loyal customer base further enhance its investment appeal.
Key Takeaways
- Amazon's stock split allows new investors to buy shares at a lower price.
- Jeff Bezos's leadership has significantly contributed to Amazon's success.
- E-commerce sales are projected to continue growing, benefiting Amazon.
- Amazon's diverse business ventures extend beyond e-commerce.
- The company maintains a competitive edge with its extensive fulfillment network.
- Prime membership growth indicates strong customer loyalty and spending.
Why Consider Buying Amazon Stock?
Amazon has performed well during the pandemic and is one of the few companies with a valuation exceeding $1 trillion. The recent announcement of a 20-for-1 stock split has increased interest among investors, making shares more accessible.
Investing in Amazon: A Smart Choice
Investing in Amazon is often seen as investing in one of the most successful entrepreneurs, Jeff Bezos. Since founding Amazon in 1994, Bezos has transformed it into a leading global company. His substantial ownership stake motivates him to enhance the company's value.
The Growth of Online Shopping
The shift towards online shopping is evident, with e-commerce sales accounting for 14.1% of all retail sales worldwide in 2019. This figure is expected to rise to 22% in 2022, indicating a robust market for Amazon's services.
Amazon's Diverse Business Model
Beyond e-commerce, Amazon is expanding into smart home technology and healthcare, including its online pharmacy, PillPack. The company is also increasing its advertising revenue and expanding its private-label offerings.
Amazon's Competitive Advantage
As the largest online retailer globally, Amazon's competitive advantage lies in its Prime membership, which offers free and fast delivery. The company's extensive network of fulfillment centers is difficult for competitors to replicate, ensuring its market dominance.
The Shift to Online Sales
U.S. online sales are increasingly taking market share from brick-and-mortar stores. In Q4 2019, e-commerce accounted for 11.4% of all U.S. retail sales, with significant growth potential ahead.
Long-Term Benefits from the Pandemic
The pandemic has likely increased Amazon's long-term customer base, as many new Prime members have emerged during this period. This trend suggests a sustained increase in online shopping habits.
Growing Prime Membership
Amazon's Prime membership has seen significant growth, with over 150 million members worldwide as of January. Prime members tend to spend more than non-members, further solidifying Amazon's revenue stream.
Conclusion
Financial analysts largely recommend buying Amazon stock, with 48 out of 50 analysts suggesting immediate investment. If you're ready to invest, log into your brokerage account, enter Amazon's ticker symbol (AMZN), and specify the number of shares or amount you wish to invest.