Amazon

Amazon

17 October 2018Reading time: 3 minutes

Amazon.com benefits from an increasing amount of people who shop online. According to a research from the National Bureau of Economic Research, the competitive battle between internet retailers like Amazon and more traditional retailers, results in product prices that vary less. Therefore consumers don’t pay much attention to product prices but have more eye for quality customer service and extra service options.

Meanwhile Amazon continues to expand its market position. Since the end of September, users of Snapchat can shop directly at Amazon. By aiming their smartphone camera at a product or barcode, the consumer receives a direct link to the product webpage with the same product at Amazon.com. It remains to be seen if consumers will indeed use this new service.

With effect from October, Amazon also has risen their temporary introduction price for their service Prime in the Netherlands from 3,99 euro to the standard price of 5,99 euro. Amazon Prime offers members extra services and benefits, such as unlimited storage space for photos and free delivery of products for the next day. Amazon Prime has already more than 100 million members worldwide.

The second quarter revenue of Amazon increased with 39 percent on an annual basis to 52,9 billion dollar. Excluding exchange rate effects, the revenue increased with 37 percent on an annual basis. The operational income was 3 billion dollar to 628 million dollar a year earlier. This resulted in a net profit of 2,5 billion dollar or 5,07 dollar per share. Last year this was only 197 million dollar or 0,40 dollar per share.

Investors were very satisfied with the second quarter results of Amazon, which resulted in a further increase of the stock price of Amazon. The company broke a new record early September by crossing the 1 trillion margin in market value.

On October 25th, Amazon will present their third quarter results. Several internet companies could not achieve their turnover goals during the second quarter, for the first time since the financial crisis. Some of those companies have lowered their expectations for the third quarter and therefore have warned investors to prepare themselves for a possible disappointment. It remains to be seen how the second quarter will end up for Amazon.

The worldwide stock markets were under pressure in October. Amazon has even been among the worst performing stocks of the S&P 500 over the past few weeks, with a loss in October of more than 6% at this moment (11-10-2018). The stock price of Amazon is compared to the start of this year still 50,1% higher.

The future price of Amazon is subject to several political, industrial and sector specific as well as economic factors. Investors should consider such risk when making their investment decisions. Developments can be different at any time than investors expect, which can result in capital losses.

Vontobel products on Amazon.com are tradable at DEGIRO.



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23/10/2019 21:06:50