Amazon Stock Price Prediction: Why Amazon’s Stock Is Increasing So Much?

This Amazon stock price prediction article was written by Alexandre Himmelstein, Analyst at I Know First.

Summary:

  • Covid 19 pandemic boosted Amazon revenues in the past few months.
  • Amazon’s stock behavior during the Covid-19 pandemic is performing very well.
  • The Chinese e-commerce, Alibaba, could be on competitors of Amazon on the Future.
  • Amazon still can increase their market share in the US and globally.
  • I Know First is bullish on Amazon for the next year according to AI algorithm.

Amazon Stock Price

There are many reasons why Amazon’s stock is increasing so rapidly. The company had an impressive performance during the last year, about 69.53%. One of the main reasons for their growth is their ability to increase their sales and revenues in every industry in which they operate. Additionally, COVID-19 stimulated people to buy more products using e-commerce platforms and this made Amazon’s sales revenue increase so much this year.

Amazon Stock Price Prediction

Today, Amazon’s revenue growth comes from product sales (spanning different products and markets) and AWS sales. The company has seen excellent performance during the last few years, according to various market analyses and reports. In some instances, increasing their profit more than 40% year over year. Their Online store’s net revenue in 2015 was about $76 billion, and in 2019, they registered a staggering $141 billion in revenue. As such, Amazon’s net income has experienced significant growth during this period.

Global net revenue of Amazon from 2014 to 2019, by product group

(in billion U.S. dollars)

Amazon Stock Price Prediction
(Source: Statista)

Amazon’s net income from 1st quarter 2009 to 2nd quarter 2019

(in million U.S. dollars)

Amazon Stock Price Prediction
(Source: Statista)

This is a significant increase for a company that has such a large operation and high costs in its online retail services. The capacity of the company to reduce unit costs and increase their profit year over year is vital for its future performance. Amazon saw an improvement in its net income margin from 1.7% in 2016 to 4.1% in 2019. Furthermore, Amazon is a future-oriented company that invests heavily in its long-term projects. This will allow Amazon to stay ahead of its competition, and build greater revenue in the long run, which will give them an advantage over its competitors  

Amazon’s Stock Behaviour During the Covid Pandemic

Amazon’s stock has been hitting record high during 2020 and the pandemic, comparing the Q2 2019 results with Q2 2020 the company register significant growth results, especially on North America(+36%), international(28%), and AWS(31%) net sales:

Amazon Stock Price Prediction
(Source: Amazon.com)

   

The COVID-19 pandemic reinforces Amazon’s business model and motivates people to buy their products on the internet. Furthermore, companies, families, and communities were affected by the COVID-19 and they are using the AWS service. In addition, the company had hired 175 thousand new employees between March and April.

Where will Amazon expand next?

International results weren’t as good as North America’s results (Especially in the first semester of 2019), as showed on the chart above (Amazon.com, INC. Segment Information.), Amazon still has a huge market share around the world to explore including the united states market(Something about 50% in the U.S.A). Specifically in the USA, the company has a relevant market share for expanded as online retail is growing until 2024.

 Retail e-commerce sales in the United States from 2017 to 2024

Amazon Stock Price Prediction
(Source: Statista)

Projected retail e-commerce GMV share of Amazon in the United States from 2016 to 2021

Amazon Stock Price Prediction
(Source: Statista)

Annual net sales of Amazon in selected leading markets from 2014 to 2019­­­­­­­

Amazon Stock Price Prediction
(Source: Statista)

Amazon has a Chinese competitor to take care of around the world: Alibaba group. The e-commerce conglomerate its registering significant growth. Alibaba offers a similar product of infrastructure cloud, that’s why the comparison with Amazon. But it will take a long way to get close to Amazon’s market position.

Annual revenue of Alibaba Group from financial year 2010 to 2020

(in million yuan)

Amazon Stock Price Prediction
(Source: Statista)

Amazon Stock Price Prediction

Outlook and perspective for 2020-2021

Throughout the year, Amazon has demonstrated the capacity to innovate and optimize its business model despite the COVID pandemic. Over the next year, it will likely continue to invest in its streaming platform and e-commerce service, as well as, its position in the digital market. According to the Leading National Advertisers, Amazon spent $21,000 per minute on advertising. 

I Know First, has a positive forecast for Amazon’s stock. As you can see below, according to our Amazon stock price prediction, Amazon should continue to perform well over the year. 

Amazon Stock Price Prediction

We will not be able to predict how it will perform in the “New Normal” and how this will affect other e-commerce companies, but it is safe to assume that Amazon will continue to be an important and relevant player in the global production chain, especially in terms of its distribution business. This will likely mean that its stock will sustain its relevance and value over the coming year. Personally, I believe that Amazon stock price will trade at a value somewhere between the Avg and high reflected in the chart below.

(Source: Nasdaq)

Past I Know First AMZN Stock Price Prediction Success

Amazon Stock Price Prediction of I Know First for has been successful with the AMZN stock forecast during 2020 and still continues to show the right position until August 2020. On July 31, 2020, the I Know First algorithm issued a bullish AMZN stock forecast, and successfully predicted the movement of the AMZN stock. In one month, AMZN shares rose by 13.08%, in line with the I Know First algorithm’s forecast. See the chart below.

AMZN Stock Forecast

I Know First’s algorithmic trading AI have modeled and generated market movements for 6 time horizons. We provide stock picking strategies for institutional clients, as well as private investors to identify the best investment opportunities in the market. We have various packages of stock market forecast, such as aggressive stocks, top tech stocks as well as Euro to dollar forecast, and Apple stock news that you can find at apple-stock-news.com. Today, we also provide gold predictions and commodity price prediction.

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