Amazon (Amazon.com) is currently the world’s largest online retail company and a major cloud service provider. Besides that, Amazon also has interests in digital streaming, artificial intelligence, and online advertising. Moreover, it’s the second company after Apple, valued above one trillion dollars.  

These reasons make Amazon an attractive prospect for many traders and investors. Investing your capital in the shares of a market leader like Amazon carries the promise of potential upsides, especially during bull runs. 

Another advantage is that information about Amazon is always readily available, and with a proper strategy, you can take advantage of its price movements in many ways. Let’s dive deeply into Amazon, what makes its stocks move, and how you can take advantage of it.  

Key Points 

• On 21 August 2024, Amazon SVP David Zapolsky sold 9,490 shares, signaling potential concerns about the stock’s valuation and possibly leading to short-term selling pressure. 
• Amazon’s launch of drone delivery trials in the UK aims to boost operational efficiency and revenue, potentially strengthening investor confidence in its long-term growth. 
• Despite strong Q2 earnings, Amazon’s stock remains volatile, trading at $172.12 as of 29 August 2024 ^[1], reflecting broader market concerns and mixed economic signals. 

Recent Developments That Could Affect Amazon’s Share Price 

1. Amazon SVP David Zapolsky sells 9,490 shares ^[2] 

On August 21, 2024, David Zapolsky, Senior Vice President at Amazon.com Inc (NASDAQ), sold 9,490 shares of the company, continuing a broader trend of insider selling over the past year.  

With no insider purchases during this period and Amazon’s stock trading above its GF Value, this sale might signal concerns about the stock’s current valuation. Given the high price-earnings ratio compared to the industry median, investors could interpret this as a potential overvaluation, which may lead to short-term selling pressure on Amazon’s stock. 

2. Amazon introduces Prime Air to the UK ^[3] 

Amazon’s expansion of drone delivery trials to the UK could potentially positively influence its stock price, signaling the company’s continued innovation and competitive edge in the retail sector. 

By advancing this technology, Amazon aims to reduce delivery times and operational costs, which could enhance customer satisfaction and drive future revenue growth. Investors may perceive this initiative as a strategic move to strengthen Amazon’s market position, potentially boosting confidence in the company’s long-term financial outlook.  

However, the actual impact on the stock will hinge on the success of the trials and regulatory approvals. 

Brief History of Amazon Corporation 

There’s plenty of history behind the growth and success of Amazon. However, for this piece, we’ll restrict it to critical events. 

1995 

Amazon initially started as an online bookseller in 1995. It was founded by Jeff Bezos in his home garage in Bellevue, Washington. It was initially incorporated as Cadabra before eventually rebranding to Amazon. Amazon set its headquarters in Seattle, Washington, where there was abundant access to technical talent ^[4]. 

1997 

Amazon went public this year and also added music and videos to its product catalog. Moreover, it embarked on an ambitious journey to acquire several online booksellers in the UK and EU. In 1998, it also added video games, consumer electronics, and toys to its catalog. 

2000s 

In a bid to enter the competitive cloud computing market, Amazon launched Amazon Web Services (AWS) in 2002. It offered APIs for developers to build applications on top of Amazon’s platform.  

Amazon later expanded to build the Alexa web crawler and popularity statistics platform in 2004, the Simple Storage Service (S3) in 2006, and Elastic Cloud Compute (EC2) in 2008. 

Another fundamental change was the Amazon Prime service launched in 2005.  

This premium delivery service is for products purchased on Amazon. A year later, Amazon introduced Fulfillment by Amazon (FBA) to help individuals and small businesses sell their products through Amazon warehouses and fulfillment systems.  

In November 2007, Amazon launched the digital-book reading platform Kindle e-reader, transforming how people read books. 

2010s to Now 

Amazon introduced the first Kindle Fire tablet computer in 2011 and the first Amazon Fire TV stick in 2014. 

Amazon then launched the popular Amazon Alexa home virtual assistant to consumers in 2015, acquired Whole Foods in 2017, and launched Amazon Go cashless groceries in 2018. 

Amazon also acquired other companies during the same period, including: 

1. MGM Holdings Inc (Entertainment). 
2. Zappos (footwear and apparel). 
3. PillPack (pharmaceutical) 
4. Twitch Interactive (Livestreaming video platform).  
5. Kiva Systems (robotics) 

Management 

At the time of this writing, Jeff Bezzo is the executive chairman of the Amazon board of directors. After former SVP Jeffrey Blackburn’s retirement in 2023, Jeff Bezos, current CEO  Andrew Jassy, and retail CEO Douglas Herrington are the leading shareholders of Amazon ^[5]. 

However, institutional players like BlackRock Inc. and Vanguard also have massive stakes in the business.  

Stock History ^[6,7,8] 

As stated above, Amazon went public in 1997. With its first IPO, the company’s stock price was $18 a share. By December 1999, this price had jumped to over $100, which marked the beginning of its meteoric rise.  

Here’s how Amazon Inc., has been performing on the stock market for the past year:  

Amazon.com Inc. exhibited significant volatility and growth throughout the past year, influenced by several key events.  

Shares of AMZN were down 3.5% following a disappointing earnings report from Alphabet after the market close on 25 October 2023. The negative market sentiment likely sparked concerns about the broader tech sector’s performance and potential implications for Amazon’s financial outlook. The stock reached its lowest point of the year the next day at $118.35. 

Following its decline at the end of 2023, Amazon’s stock has experienced a substantial and steady recovery, reaching a 52-week high of $201.20 on 8 July 2024. This could possibly be due to Amazon Q2 earnings report which exceeded market expectations, boosting investor confidence. 

Despite the strong Q2 earnings report, the stock experienced a sharp decline in early August 2024, dropping by 12%. Amazon’s Q2 earnings report, while decent, missed revenue estimates slightly and provided light guidance for Q3. Additionally, a weak unemployment report indicated a faster-than-expected weakening of the economy, contributing to a broader market sell-off. 

At the time of writing, the stock is trading at approximately 12.8% below its 52-week high, reflecting broader market trends and investor sentiment. 

Stock Split 

To increase the number of investors in Amazon, the company had four different stock splits. Between 1997 to 1999, there were three stock splits, and the last one happened in mid-year 2022.  

Stock split list ^[10]  

Despite Amazon’s stock price taking a hit when the tech bubble burst in 2008, it recovered in 2010. Each year before and since Amazon’s stock price has grown significantly despite the market uncertainty.  

Some factors that drove the AMZN price up were its expansion into other market segments like cloud computing. Moreover, Amazon’s acquisition history continues to make the company more valuable.  

Price Surge 

From 2020 to 2021, despite the challenges posed by the Covid-19 pandemic and subsequent lockdowns, Amazon recorded some of its highest stock prices ever, reaching an all-time high of $185 in mid-2021. This significant increase in stock value can be attributed to a surge in online shopping, as many consumers turned to Amazon’s e-commerce platform to purchase household and other items. 

Dividends 

Amazon (AMZN: NASDAQ) does not pay dividends to its investors. Although this may be a drawback for some investors, others find it rewarding because they can avoid double taxation, experience the exponential growth of company share value, and excess profits go into research and development, which has tax benefits ^[11]. 

Amazon’s Stock Trading Information 

• Primary exchange: NASDAQ  
• Amazon Stock Symbol: AMZN  
• Country: U.S.  
• Currency: USD  
• Trading hours:  
  Main: 9.30am to 4pm ET, Mon to Fri
  Pre-market: 4am to 9.30am
  After-market: 4pm to 8pm

Why Trade Amazon (AMZN) Stocks?  

Trading AMZN may be ideal for several reasons ^[12] 

• Dominant Market Position: Today, Amazon is the leading e-commerce platform in the world and acquired many small e-commerce platforms to expand into other territories.  
• Strong Financial Performance: Despite market ups and downs, Amazon has steady financial health of ever-growing revenues and stock prices 
• Innovation: Amazon reinvests most of its profits into research and development. Technology is one particular aspect Amazon is actively creating and adopting.   
• Diversified Business Model: Amazon has many income streams, unlike other companies. For instance, cloud computing, robotics, food, and fashion lifestyle.  
• Future Growth Potential: Amazon offers services and products with a massive and diversified future outlook that will keep them competitive for years.  

Factors That Affect Amazon’s Stock Prices 

Let’s explore some factors that cause the price of Amazon stocks to move ^[13]: 

Micro Factors 

• Management changes and employee relations. 

For example, changes in managerial positions can affect stock prices. The recent change of CEOs from Jeff Bezos to Andy Jassy caused AMZN’s stock price to rise. Other examples include strikes and employee disputes.  

• Mergers and acquisitions 

Whenever Amazon acquires a new company or investment, it positively affects the stock price.  

• Reputation 

Amazon’s reputation and brand image are vital aspects of stock pricing. Because of its fulfillment reputation, people trust Amazon, which positively impacts its company’s health and stock prices.  

• Supply chain issues 

A working supply chain is essential to Amazon’s success. Shortages caused by the 2022 supply chain issues led to delivery strains, negatively affecting its revenues and stock price.  

Macro Factors  

• Economic factors  

Slow or rapid economic growth can equally impact Amazon’s stock price. During bear markets, the price of Amazon shares drops, and in bull markets, it rises. Moreover, deflation and inflation can affect the prices of Amazon stocks because it affects the ability of consumers to purchase products and services from Amazon. 

• Interest rates 

Drastic changes in the bank and government interest rates can reduce consumer spending and change investors’ or market sentiments. High government interest rates may cause investors to pull their capital out of Amazon stocks and invest them in relatively risk-free government instruments like treasury bonds.  

• Geopolitical risks:  

Geopolitical risks like disasters and conflicts can affect Amazon’s stock price. For instance, the 2019 global pandemic, which led to global lockdowns, quickly increased Amazon’s stock price as consumers relied on their delivery services to keep themselves from contracting the COVID-19 virus.  

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