Amazon Story

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AMZN -- USA Stock  

USD 3,009  69.37  2.25%

Several companies have surfaced as winners in the present economy since COVID-19 onset. Amazon is among the best-performing companies of the last few years. Its shares have been sailing all-time highs of late.

Published over a month ago
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Should you invest in Amazon (NASDAQ:AMZN) this year?

Despite the glorious moments, should you invest in Amazon right now? Many investors are still asking themselves this question. This post will help determine if investing in Amazon stock is right for you or you should wait for a correction.

Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two companies, such as Amazon or JD is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

How important is Amazon's Liquidity

Amazon financial leverage refers to using borrowed capital as a funding source to finance Amazon Com ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Amazon financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Amazon's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Amazon, but it might be worth checking our own buy vs. sell analysis

Correlation Between Amazon and JD Com Inc

In general, stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Amazon together with similar or unrelated positions with a negative correlation. For example, you can also add JD to your portfolio. If JD is not perfectly correlated to Amazon it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Amazon for example, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down. Please check pair correlation details between AMZN and JD for more information.

Amazon exotic insider transaction detected

Legal trades by Amazon insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Amazon insider trading alert for general transaction of common stock par value $.01 per share by Jeffrey Wilke, CEO Worldwide Consumer, on 14th of September 2020. This event was filed by Amazon Com Inc with SEC on 2020-09-14. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

A Deeper look at Amazon

Pros and cons of investing in Amazon right now

Timing is crucial in the AMZN stock market. So when considering buying or selling stocks, it's essential to perform the fundamental together with technical analysis that pinpoints not only lower-risk entry spots but also offer good potential rewards.


Profitable for short- and long-term investment 

AMZN shares have been hitting highs currently. Earlier June, the stock price was approximately $2722.35 and closed at $2670 on June 21. A report published by Laura Martin, Needham analyst, claimed that in a 12-month budget (short-term), AMZN could gain over $3200 and up to $5000 based on hidden value multiplier.

Amazon's addressable market inflating decisions enable it to elongate its development runway driving higher profit margins. Plus, it offers lower stockholder risk through diversification of revenue stream. For long-term, the coronavirus onset accelerated consumer adoption of AMZN products and services. Besides, Amazon CEO Jeff Bezos claimed the company allocated more than $4 billion to ensure effective product delivery to customers and maintaining employees' safety.

Disruptive entity

Amazon has the ability and willingness to disrupt a wide selection of industries. Apart from its expansion into Amazon Web Services — which accounts for approximately 43% and 19% of the company's revenue and operating margins respectively — Amazon added media business such as Amazon Music and Twitch. Also, its involvement in whole foods led to increased revenue, especially at the start of the COVID-19 pandemic.

The company is currently carving out new markets like merging with the transportation field (the electric truck manufacturer and self-driving car technology). Also, it's venturing into healthcare market (acquiring online pharmacy business PillPack in 2019).

Amazon proves it can disrupt any business it desires or comes into contact with. Over time, this implies it will become a superstore beating other established stores.


Volatile breakout

Currently, AMZN stock is not a buy to smaller portfolio investors. In April 2020, its stock extended after a breakout, which was past cup-without-handle entry. Moreover, since the breakout, the stock displayed one of the heaviest turnover days during its reversal on July 13.
This made Amazon shareholders to fret over their investments' potential negative results. This clarifies why it's trading stocks high on the record.

Overpriced stocks

Amazon stock is overpriced, making it even risky for investors with smaller portfolios. The run-up occurred after the pandemic began taking it to loftier levels. On a cost-to-sales ratio, AMZN stock might be valued. And even though it deserves the premium valuation, 100-times forward earnings put it at stake if it doesn't follow a perfect execution.

Investors can buy Amazon shares in manageable fractions to counteract the 'too expensive' narrative. These fractional shares are available on specific stocks contingent on the one someone opts to use.

Should you invest in Amazon?

The answer to this seminal investing question is YES and NO. For large entities, investing in AMZN for short- and long-term is favorable. When it comes to tight-budgeted investors, timed investment is their only gateway to the AMZN stock market. In the long run, fundamental and technical analysis come in handy to identify lower-risk entry points to ensure a high return on investment.

The evidence clearly shows retailers are migrating in greater numbers to Amazon than ever. After experiencing the convenience and easiness of its stock market, the bigger percentage will stand to benefit.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Amazon Com. Please refer to our Terms of Use for any information regarding our disclosure principles.

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