Amazon Stock Price Prediction: Why You Should Remain Bullish On AMZN

motek 1This Amazon stock price prediction article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Seeking Alpha’s Quant Rating System has a Neutral recommendation for Amazon’s stock.
  • I am still endorsing AMZN as a buy. The holiday shopping season is coming soon. I expect Q4 2019 sales to set records.
  • Going long on Amazon’s stock while it trades below $1,800 is worth the risk. My bet is that this stock will trade near $1,900 price levels by January/February 2020.
  • The other reason why I remain bullish is that Amazon is emerging as a potent advertising platform.
  • My fearless forecast is that Amazon can eventually have a $20 billion/year advertising business within the next three years.

In spite of the Neutral recommendation from Seeking Alpha’s Quant Rating System, I am reiterating a buy for Amazon’s (AMZN) stock. Quantitative evaluation of a stock’s investment quality do not fully apply to Amazon. AMZN was and still is a momo stock. A momo growth stock like Amazon will never score a good rating from quantitative analysis.

Amazon Stock Price Prediction
(Source: Seeking Alpha)

The holiday shopping season is coming soon. It is my fearless forecast that Q4 2019 earnings numbers will set records when Amazon makes its report on January or February 2019. There’s still no challenger to Amazon’s dominance in North American online retail. It is safe to predict that Amazon’s Q4 2019’s revenue will beat Q4 2018’s $72.38 billion.

Amazon Stock Price Prediction
(Source: Statista)

Amazon reporting Q4 revenue of more than $73 billion early next year could push the stock to beyond $1,900 by January or February. My prediction is reasonable. The average price target for AMZN at TipRanks is $2,279.63.  The Sell Side Rating at Seeking Alpha also recommends a buy for AMZN and gave it an average price target of $2,261.54.

Amazon Stock Price Prediction
(Source: Seeking Alpha)

Amazon Is Super-Dominant In North America

Amazon remains a very attractive long-term investment because of its unchallenged leadership in U.S. online sales. As of Q1 2019, Amazon touts more than 56% market share in U.S. online sales. The estimated online retail sales in the United States for this year is $561 billion.  No other retailer can match Amazon’s estimated $235 billion/year online sales in the U.S.

Amazon Stock Price Prediction
(Source: Marketplacepulse.com)

As long as Wal-Mart (WMT) and other retailers remain far behind Amazon’s U.S. online retail sales, AMZN persists as a priority investment for growth-minded investors. The U.S. online retail business is expected to hit $660 billion by 2020, and $1 trillion by 2025. Amazon is therefore the obvious biggest beneficiary of the fast-growing U.S. e-commerce industry.

Amazon Is Growing Beyond E-commerce and AWS

Another very compelling reason why you should remain optimistic over AMZN is its emergence as a leader in digital advertising. Please study the chart below. Third-party Services of the advertising business segment now generates $12 billion in annual revenue for Amazon.

Amazon Stock Price Prediction
(Source: Statista)

My current and long-term view is that digital advertising is a more profitable and bigger growth driver than Amazon Web Services (AWS). eMarketer estimates that total global digital ad media spending will reach $333.25 billion this year, and it will hit $517.51 billion by 2023.

As per eMarketer’s estimates Amazon will have 2019 net advertising revenue of $14.03 billion. Amazon is now the no.4 player behind Alibaba (BABA), Facebook (FB), and Google (GOOGL). My fearless forecast is that the fast-growing digital advertising business will help Amazon grow a $20 billion/year advertising segment within the next 3-5 years.

(Source: eMarketer)

My optimism over Amazon’s bright future in digital advertising is because of its massive number of daily visitors. As of December 2018, Amazon websites have more than 206 million in monthly unique visitors. Companies and retailers wanting to market their products and services know that Amazon’s websites offer a huge audience for targeted and localized advertisements. Amazon is the world’s number 1 most-visited website for e-commerce. Amazon is the no.14 rank website in overall global online traffic.

The potency of Amazon in advertising is well illustrated by its emergence as the no.2 search advertising company in the United States. Rather than using Google, many in America are now using Amazon to search products they want to research or buy online.

Amazon bids out its product search results to third-party marketers/companies.  The highest bidders get to have their products emerge on the top of search query results. This is similar to how Google market its ad search advertising platform.  Unlike Facebook, Amazon can compete against both Google’s search engine and digital display ad platforms.

Conclusion

AMZN is a strong buy in my book. My 90-day price target for this stock is $1,900. My 12-month PT is $2,100. Amazon’s leadership positions in e-commerce, cloud computing, and digital advertising makes it a golden long-term growth investment.

Amazon’s growth rate is clearly slowing down. However, a company with an estimated forward revenue CAGR of 23% obviously remains a momentum-growth driven investment.

(Source: Seeking Alpha)

My buy recommendation for AMZN jives with its super bullish one-year algorithmic stock market forecast score from I Know First. A stock only needs to score 100 to get a bullish or buy signal from I Know First. However, I Know First gave AMZN a 1-year trend score of 427.6. Amazon’s stock is therefore granted a super-bullish signal by I Know First’s stock-picking AI.

How to interpret this diagram.

Past Success With Amazon Stock Price Prediction

I Know First has been bullish on AMZN’s shares in past forecasts. On April 18, 2018, the I Know First algorithm issued a bullish prediction for AMZN stock. The algorithm successfully forecasted the movement of the Amazon’s shares on the 1-year time horizon. Amazon’s shares rose by 23.80% in line with the I Know First algorithm’s trade ideas forecast. See chart below.

This bullish Amazon stock price prediction was sent to the current I Know First subscribers on April 18, 2018.

Here at I Know First, our stock prediction algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily stocks forecast, currencies forecast, gold predictions and, in particular, Apple stock forecast. Today, we are producing daily forecasts for over 10,500 assets. These forecasts generated by our algorithmic trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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Please note-for trading decisions use the most recent forecast.