AMZN Stock Forecast: $4,250 Target As New Horizons Unfold With MGM

motek 1This AMZN stock forecast article was written by Nicole Shammay – Analyst at I Know First.

Summary:

  • The MGM buy is affordable given Amazon’s 44% year-over-year growth in Q1 2021
  • The MGM acquisition will ensure a firmer grip on consumer streaming for AMZN
  • Growth opportunity with Amazon Care Scares Competition
  • I project a target price of $4,250 on a year-horizon

Amazon Secures Financials Through the Pandemic

AMZN stock forecast SWOT Analysis

Even through the pandemic, while so many other companies were failing, Amazon soared through the first quarter with a cash flow increase of 69% from the prior year. And, with 175 million Prime members now, the streaming hours have increased by more than 70%, indicating strong customer loyalty and an effective brand name. Amazon was also reported ahead of other competitive cloud infrastructure services such as Microsoft (19%) and Google (7%) within the past few months, according to Canalys. AMZN stock earnings in the latest quarter were also respectably strong, with a 44% increase in revenue from Q1 2020 to Q1 2021. And a 220% increase in net income from Q1 2020 to Q1 2021. The AMZN stock forecast is indicative of these percent changes as growth has been proven and thus expected in the future.

amzn stock forecast financial results
Source: AMZN Quarterly and Annual Financial Reports , GeekWire

Amazon Web Services also served as a treasure by producing $4.2 billion in operating income, creating a remarkable 30.8% operating margin. It was also reported many businesses turned to Amazon Web Services during the pandemic to manage their infrastructure because, “They see that partnering with AWS and moving to the cloud gives them better cost, better capability and better speed of innovation.” Amazon’s revenue from cloud computing jumped 32%, resulting in $4.16 billion in operating profit, indicating that AMNZ is improving the efficiency of controlling its overall costs. Lastly, AMZN currently holds $73 billion in cash and cash equivalents, proving they have enough to repay investors and grow the business. Thus, Amazon’s most significant strength behind its brand name is its convincing financial performance. The AMZN stock forecast is representative of the continued expansive growth through the enhancement of synergetic services. 

MGM Provides an Unmatched Opportunity for the AMZN Stock Forecast

Amazon Prime’s content library will receive a boost of over “4,000 titles offering more than 17,000 hours of entertainment,” according to The Motley Fool. The MGM family also brings along famous and sought-after franchises like Rocky and James Bond. These additions will continue to boost their market audience, allow for an expansive range of viewers, and compete with other services – all working to further secure the Amazon name. 

Essentially mutually beneficial for both Amazon and MGM, the acquisition allows Amazon to capitalize on its growth. The entertainment value can expand now far beyond the rights Amazon acquired to NFL streaming of games. The tech giant can position itself precisely to compete with other dominant services. The new content may also nudge consumers into Prime e-commerce as the Amazon Prime service is a crucial differentiation tool for the company to leverage. Integrating their existing content with MGM’s archives may also drive Prime subscriptions and decline other streaming services market share.

Furthermore, Amazon might tap into other ecosystems outside of Prime, such as theatre and cinemas, with MGM’s distribution channels. Finally, completing this acquisition stops any other entertainment service such as Netflix, Hulu, or Disney+ from obtaining it. Stepping into MGM studios cuts out the competition, ensures a stronger grip on consumer retail and consumer loyalty.

amzn stock forecast binding amazon and MGM
Source: Deadline.com

These moves can also encourage more consumerization from other businesses of Amazon such as Amazon Books, people will probably want to buy the hardcovers of their favorite new movies, or purchase on their Kindle, eBook, Audible, audiobooks, soundtracks, and more – increasing their extensive merchandise selection. And, creating competition with other sellers for the products. Amazon Publishing could also make deals with authors to add new short stories and non-fiction pieces as simple additions to the movies or shows. Amazon can use the addition of the James Bond franchise to boost its e-commerce offerings with products featured in the franchise. On paper, the MGM buy seems like a chance to purely capitalize Amazon Prime. But, I am confident that – in its nature – the transaction will compel more people to get locked in and potentially addicted to the Amazon Prime membership, therefore increasing its stock forecast. 

Amazon Proves Unstoppable Given New Industry Disruption

amzn stock forecast potential care app
Source: TechCrunch

Rumors have been reported of Amazon’s potential entry into the primary care industry for months. However, Amazon announced another innovative feature, Amazon Care, in March and expects to have in-person care facilities in several states beginning this summer. They essentially partner with an independent private medical practice, Care Medical, to further develop two major emerging trends in the healthcare industry: telehealth and home-based care. Utilizing their self-driving technology, the extension offers an innovative method of health options that will offset the troubling inflation in current healthcare costs. And, Amazon Care will spring the company into having a larger physical presence, which is one of their weaknesses. The fact that Amazon Care will also foster Amazon Prime same-day delivery with medical care around the clock suppresses any fears that the expansion won’t work as well as possible imitation. A company known for its same-day value will be far more trusted than any other emerging firm because Amazon has already achieved its credibility. With COVID-19 passing, patients’ fear skyrocketing health care costs, Amazon’s infiltration could not be better.

amzn growth grade
AMZN Growth Grade: Seeking Alpha

Amazon is notorious for disrupting various industries, brick-and-mortar, groceries, and even insurance to name a few. Now as they step into the trillion-dollar healthcare market, they certainly have competition from companies such as Teledoc Health (TDOC), American Well (AMWL), Rite Aid (RAD), CVS Health (CVS), and Walgreens Boots Alliance (WBA). Yet, the day that Amazon reported they would be expanding Amazon Care outside of the state of Washington, the TDOC, AMWL, RAD stocks fell. CVS and WBA skidded down 1% and AMZN stock grew 1.4%. Thus, their competition clearly has what to fear, and the AMZN stock forecast is symptomatic of the growth.

Conclusion

Amazon stunned the world in 2017 with its $13.7 billion deal to buy Whole Foods Market. Now, with their second-largest acquisition underway this week, Amazon has acquired Metro-Goldwyn-Mayer (MGM) studios for $8.45 billion. Though MGM had been struggling with bankruptcy over the last decade, the new acquisition will prove to be a positive move for Amazon given its impact on the streaming service, Amazon Prime, and the subsequent facets it will affect. With a 215% increase in the share price from a year ago and a 44% jump in revenue, Amazon is growing powerfully and unconstrained. They have financial stability and constantly prioritize investing for growth rather than profits. Thus, as they infiltrate the healthcare industry, the dangerous shock due to the Coronavirus paired with their successful integrations in the past makes it easy for me to feel confident that Amazon will deliver results. So, I recommend the stock as a strong buy and set the price at $4,250.

amzn stock forecast

Finally, my bullish prediction for Amazon is greatly supported by our algorithmic forecast. As one can see below, I Know First forecasts AMZN to have an impressive one-year trend score of 221.02 using the effective AI, indicating a strong positive increase in stock price. As well as a confident predictably level at 0.32.

Past I Know First Success with Amazon Stock Forecast

On April 7th 2020, I Know First has made a bullish Amazon stock forecast, which proves to be successful as we see AMZN’s price rose by some 64% in April over a 1-year horizon and continues the positive trend.

Here at I Know First, one of the top fintech companies in the industry, our algorithm has modeled and predicted asset 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 S&P 500 forecast, including daily stock market forecastcurrency exchange forecastgold price forecast as well as AAPL stock price. In particular, I Know First has been closely watching and predicting the Coronavirus stock market to assist investors during this uncertain time.

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