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Analysis of Amazon share price

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Increasing numbers of traders and individual investors are becoming interested in the assets of major American companies among which those quoted on the Nasdaq are particularly popular. This is the case with the stock of the Amazon company, which experiences very significant annual fluctuations and it is therefore important, before buying and selling, to analyse it carefully.

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Amazon's revenue and market capitalization

28/09/2021 - 13h41

Amazon is one of the companies that have performed well financially in the fiscal year 2020. Let's take a look at the annual results recorded by the American group over the last year.

Elements that can influence the price of this asset:

Analysis N°1

As part of your fundamental analysis of this action, you will of course monitor with great attention the online sales sector in general and the evolution of demand.

Analysis N°2

Amazon's reputation is often damaged by the press and any event or communication in this regard can have a significant impact on the share price. This may include, in particular, legal cases or other social scandals.

Analysis N°3

The increasing diversification of the activities carried out by this group is also an interesting hints to study. All operations aimed at accelerating this diversification, such as the creation of strategic partnerships, company takeovers or joint ventures, will therefore be monitored.

Analysis N°4

Since Amazon's sales are made internationally, it will also be necessary to closely monitor the foreign exchange market as exchange rates can have an impact on the company's competitiveness.

Analysis N°5

Finally, although Amazon's competition is relatively poor, we will keep a close eye on the other major online sales companies and their major events, but also and above all on the evolution of the market shares of each of these major players.

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General presentation of Amazon

The Amazon Company is well known to one and all due to its major presence on the internet worldwide. Its major activity is online book sales but over the years the Amazon Company has diversified its activity sectors and now sells all kinds of cultural products such as CDs, DVDs, digital appliances, video games, household electrical appliances and even payable music downloads.

The majority of its turnover is from the United States but Amazon has managed to conquer the world and its activity is also strongly developed in Europe. Nowadays this company is one of the world leaders in online products distribution for the general public.

Amazon shares are quoted on the All Markets category of the Nasdaq Global Select stock market in the United States. The Amazon Company is also included in the calculation of the Nasdaq 100 American stock market Index in the United States.

Analysis of Amazon share price
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The major competitors of Amazon

Before buying or selling Amazon shares, we will now take a look at some of the main competitors of the group in its different sectors of activity with a quick presentation of these companies.

Alibaba

First of all, Alibaba Group is a Chinese company listed on the stock exchange, which also specialises in online activities, including a public marketplace to facilitate exchanges between businesses, payment and retail platforms, a search engine for shopping and cloud computing services. Its revenues are higher than Amazon's.

eBay

eBay is another US marketplace specialising in online trading that has become a global reference in this field. It currently has over 185 million active users worldwide. eBay currently has over 13,000 employees.

Walmart

This other transnational American company specialises in mass retailing and has also become the world's leading group in this sector ahead of Carrefour. The group has 3,500 shops and a market share of almost 20%.

Carrefour

Another retail group that can take market share from Amazon is the French group Carrefour, which has pioneered the hypermarket concept since 1963. Following its merger with Promodès in 1999, it became the European leader in the retail sector and the third largest player worldwide in 2013.  The company operates in Europe, South America and Asia as well as in other major areas of the world through local partnerships. It also operates supermarkets, convenience stores and self-service wholesale.

Netflix

Finally, and in the area of online content, Amazon is of course up against the giant Netflix, which is an American multinational created in 1997 in the creative industries sector and specialised in the distribution and exploitation of film and television works via a dedicated platform. Its headquarters are located in California, in Los Gatos. It should be recalled that Netflix started out as a commercial operation providing an online service for renting and buying DVDs delivered to the home and then moved on to subscription video streaming.

The major partners of Amazon

Ford

Amazon hasn’t stopped developing new partnerships with businesses in sectors that are sometimes quite surprising. For example it signed an agreement with the Ford automobile company for the design of a device enabling the remote control of a car.

Samsung

Amazon also created partnerships with Samsung in 2014 in the online content publishing sector using 4K monitors.

Nintendo

To conclude, in 2015 Nintendo also announced the implementation of a partnership with the Amazon Group like that of the Spanish Dia Company with whom they signed an agreement in 2016 for the online sale of their products.

Monoprix (Casino group)

In 2019, the two retailers have joined forces in a commercial partnership to market Monoprix products to Amazon Prime Now customers in Paris and its nearby suburbs.

Volkswagen

Also in 2019, Amazon Group also signed a wide-ranging partnership with the Volskswagen Group as part of the development of a global platform called Volskswagen Automotive Cloud.

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Positive factors for Amazon shares
The factors in favour of a rise in the Amazon share price:

To understand a company and its future growth potential, you need to know its strengths and weaknesses, which are the advantages and disadvantages of this stock. We therefore propose to discover the main strengths and weaknesses of the Amazon group in a little more detail.
As far as the strengths are concerned, and therefore the elements that can help Amazon to grow, the following elements are particularly noteworthy:

  • First of all, it should be noted that the Amazon group benefits from a long history and strong experience compared to its competitors. It is known that the American group was a pioneer in the market and thus benefits from a head start in terms of the value of its brand.
  • Amazon's advantages also include integrated services such as online ticket tracking, online money transfers and other innovative services that make it a group with a strong advantage. Indeed, the company invests heavily in research and development every year to maximise customer loyalty and attract prospects.
  • Another of the group's strengths is the size of its customer base, which continues to grow from year to year. The group's customers are becoming more and more numerous thanks to Amazon's strong international presence. It should be noted here that the group regularly sets up operations to further increase its presence throughout the world.
  • Another strength of the Amazon group is of course its workforce. Amazon is one of the largest employers in the world and currently employs more than 500,000 people at its various sites in some 20 different countries.
  • Let's continue our overview of Amazon's advantages by highlighting the strength of its brand image, which it fervently maintains through its marketing and branding activities, which represent a large part of its annual budget. Today, the Amazon brand is indeed unavoidable and can be seen everywhere, whether through online advertising, print advertising, television advertising or other media, which increases its notoriety throughout the world and helps attract new prospects.
  • Another factor is that Amazon is a leader in specific retail segments. For example, the group is currently one of the world's largest retailers in the technology sector.
  • Another strength of the American company is its online content offering. Amazon is indeed one of the main players in this sector today and this activity has been growing rapidly for several years. This includes music, films and entertainment such as series or shows offered by Amazon Prime, a platform that competes with Netflix or Disney +.
  • It was also noticeable in the context of the covid 19 pandemic that hit the world in 2019 that Amazon was one of the companies to benefit. Indeed, online content providers as well as distance selling platforms have benefited greatly from the successive confinements.
  • Finally, it should also be noted that Amazon is constantly diversifying its activities. Recently, the group has positioned itself in the cloud hosting solutions sector, which has considerably increased its revenues but also contributed to its brand image.
Negative factors for Amazon shares
The factors in favour of a drop in the Amazon share price:

As we have just seen, the advantages that the Amazon group has are numerous and it is undoubtedly these strengths that have allowed the group to become the giant that it is today. But of course, this company also has its weaknesses, which we propose to discover now.

  • First of all, we must of course take into account the fact that the Amazon group is not the only one to operate in these sectors. Indeed, competition in this sector is particularly intense and many companies, in view of the success of Amazon, have also diversified into this sector. The group's market share is therefore constantly threatened either by the arrival of new players or by the activities of other online retail giants.
  • While the Amazon group's marketing shares help it to maintain a good brand image and to remain visible throughout the world, the budgets and the large investments in advertising or in customer discounts are very high. This represents a weakness for the company as these investments weigh on its profitability in the long term.
  • Despite the various efforts made to improve its image through positive communications, the Amazon group is still suffering from the accusations it was the target of a few years ago concerning the working conditions of its employees or their salaries.
  • Finally, and again with regard to the group's competition, we can also talk about local competition by segment, which weighs heavily on the company's activities. Indeed, since the Amazon group has taken a position in many vertical sectors of activity such as e-commerce, video, music, cloud or fire stick, it is now facing competition from different players in each of these segments.

When analysing Amazon's share price, you should of course always take these factors into account before buying or selling. This is because these strengths and weaknesses will influence how the company can deal with the challenges and threats of the coming years. These strengths and weaknesses may also change over time.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

How much is Amazon's market capitalization?

After the publication of the accounts for the 2019 financial year, the Amazon share reached a peak on the stock market. On 01/30/2020 the share jumped by more than 12% in a single session. The capitalization of this NASDAQ 'BLUE CHIP' crossed the legendary bar of 1000 billion dollars. Amazon now rubs shoulders with Apple, Microsoft and Alphabet, which are the only ones to display a valuation higher than that of the e-commerce giant.

What elements could cause the Amazon share to drop?

The evolution of Amazon's stock market price has become a success story in recent months. The share has increased by 2160% in 10 years!!! In January 2020 alone, it displayed a performance of + 18%. Amazon is now firmly seated as a world leader. The firm seems to have crushed the competition. However, as the expression goes, the Tarpéienne rock is close to the capitol. Amazon operates on 5 continents. Its turnover is multi-currency and permanently exposed to a sharp drop in a currency on the foreign exchange market. Its leading position now requires it to innovate in order to find new sources of growth. Worse, since most of its activities are linked to world trade and household consumption, Amazon would be hit hard by an economic recession. All these elements could bring the Amazon share price down so should be closely montiored.

Should the Amazon share be analysed in euros?

The Amazon share is one of the stocks that stands out for its high volatility on the stock market. Although the share price has been rising for 10 years, it also continues to oscillate from lows to highs. The stock is listed on NASDAQ in US dollars. If you're planning to buy the Amazon stock, you'll have to take into account the cost of the EUR / USD conversion when buying and when selling. However, rather than focusing on the evolution of currencies and the EURO equivalent value of the Amazon share, it would be better to analyze the opportunities to acquire this share at a low with the aim of short-term capital gain.

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