If you're wondering about the future of Amazon stock price, you've come to the right place. We've put together a few predictions for the stock over the next 10 years.
Amazon will hit $100 by the middle of 2022 and then $125 by the end of 2023
Amazon has been on a roll with its ecommerce and web services. In particular, its cloud computing service is a powerhouse. The company has also made a splash in the digital advertising space. Several companies have tapped into the lucrative ad market, but Amazon has mastered the art of making its customers happy. As for the best way to pay for Amazon's services, the subscription-based Prime service offers free expedited shipping to more than 62.4% of the population, and a growing array of services and benefits to boot. For the more frugal, the Amazon Marketplace features a huge selection of products, from clothing to electronics to groceries.
Among the dozens of ecommerce sites, Amazon has consistently outperformed the competition in several important categories. The largest category, ecommerce sales, saw a 21% jump, a significant gain in a down economy. Other notable improvements include a 18% increase in third-party seller revenue. This amounted to more than US$25 billion, and is the largest such amount by far for the company. Amazon's most recent acquisition, the US Open's swanky new broadcast rights, is the company's first foray into sports broadcasting. It will air all MLS matches from the start of the 2023 season on its Apple TV streaming service.
Despite the fact that Amazon's ecommerce business is in a tailspin, its web services and other offerings have fared better, thanks in part to long-term contract arrangements. These include the likes of the snoopy branded e-commerce store. Moreover, it has a stellar record of supporting global charities and humanitarian causes. The company's philanthropy is a major reason why it was able to garner such attention from the big wigs in the tech world.
Despite the challenges, it is hard not to be impressed by Amazon's achievements in the digital ad space, as well as its cloud computing service. Although its stock has been a drag on the rest of the market, there is a lot to look forward to in 2023 and beyond. Especially if you're into consumer reliant companies, you'll want to keep your fingers crossed. And when it comes to the hottest new fads, you can bet that Amazon will have its hands full.
Amazon will report first quarterly profit of the year for the third quarter
Amazon has reported its first quarterly profit of the year, posting a 37% rise in revenue. The company's net income topped analyst expectations, hitting $6.3 billion in the third quarter. However, the company's guidance for the fourth quarter was less than stellar.
Amazon reported sales of $112.3 billion, up nearly 42% from the year-ago period. Total sales included Amazon's own product sales, as well as seller fees and marketplace revenues. It also included revenue from its Amazon Web Services (AWS) cloud computing business.
The company's “other” category, which includes advertising, increased by 51%. Amazon's total sales growth is primarily due to Amazon's growing international segment. In addition, the company's advertising business continues to produce dividends.
Amazon's net income for the quarter was the largest in the company's history, topping the previous record by nearly a billion dollars. This result was largely driven by a strong performance from the Amazon Web Services business. Nevertheless, the company's operating expenses climbed 13.2% in the quarter.
Costs were pushed up by a decline in productivity and an increase in shipping expenses. Although the Amazon Web Services business generated sales in line with analysts' estimates, the growth rate of the business has fallen in recent years. A significant portion of Amazon's sales comes from the company's Amazon Prime service. Amazon Prime includes a free one-day delivery service, a robust loyalty system, and a variety of customer-friendly offers. There are also Amazon Fresh stores, which contribute to AMZN grocery sales.
Amazon has expanded its presence in Canada, India, and the U.K. It has also invested in micro mobility solutions and electric trucks. Additionally, Amazon has partnered with minority-led organizations to help provide affordable housing in the Washington, D.C. metro area.
Overall, the company's workforce grew by more than 50 percent from the second quarter to the third. However, the workforce declined slightly in the final three months of the quarter.
The company's guidance for the fourth quarter is for sales of between $112 billion and $121 billion. Despite the mixed financial results, Amazon continues to be a strong player in online retail.
Amazon's recent investment in EV manufacturer Rivian proved to be a questionable bet
Amazon has invested hundreds of millions of dollars in Rivian, an electric vehicle (EV) manufacturer. The e-commerce company has acquired an 18 percent stake in the Michigan-based startup. This deal is part of Amazon's efforts to reduce carbon emissions.
Rivian's stock rose 40 percent in the fourth quarter. It is now trading at a value of just less than 8 times enterprise value-to-sales. This is a relatively small enterprise value-to-sales ratio. But it is still a big jump from its initial public offering. Rivian has made a series of big investments. For example, it has spent over $2 billion on building a factory in Illinois. In addition to that, the startup has spent $30 million on marketing. That is not a bad investment considering the company has had strong demand for its vehicles.
Rivian plans to spend $5 billion on building a new factory near Atlanta, Georgia. However, its financial history has been a bit opaque. In an S-1 filing, the company laid out its recent financial history.
Rivian has an order from Amazon for 100,000 electric delivery vans. The vans will be used in over 100 cities throughout the United States. As part of the agreement, Amazon is obligated to buy the vehicles for at least four years.
Rivian is also hoping to take on Tesla with its R1T pickup truck. The pickup uses a dedicated electric platform, and its range is around 400 miles. With this level of range, the truck is expected to be able to compete with GMC and Ford. Rivian plans to produce a total of 25,000 vehicles this year. This is about half of its production target for 2022. By the end of the decade, the company plans to make about 100,000 deliveries.
Rivian has been battling supply chain issues. Its current assembly plant in Illinois is operating at just half its capacity. It has had to lay off hundreds of employees. Rivian hopes to sell the vehicles for a profit of at least $8,700 per car. The company expects to make the same amount on commercial vehicles.
Rivian has lost $994 million in the first six months of 2021. Although it has lost money, the company believes that it has a lot of room to make up for the lost revenue.
Amazon will not reach $10,000 by 10 years
Amazon has been known to be one of the largest companies in the world, and its stock is also predicted to grow significantly over the next several years. However, there are still a number of risks, which could result in a lost decade for Amazon shareholders. There are a few big initiatives that need to be successful for Amazon to thrive.
One of the biggest risks for Amazon is the company's lack of cash flow. Its retail business has been struggling, especially after the pandemic hit. The company has been in cost-cutting mode to preserve cash. And with the economy contracting and record-high interest rates, consumers are facing a lack of spending power. That has led to a downturn in its stock.
In response to the changing business landscape, Amazon CEO Andy Jassy has begun to review the company's businesses and cut costs. He refocused on other parts of the company, such as its cloud computing business. As part of this process, the company changed its product liability insurance requirement for sellers. This means that sellers must carry product liability insurance once they meet a sales target of $10,000 per month for three consecutive months. Previously, Amazon only required sellers to purchase product liability insurance once they met a monthly sales target of $500.
Another risk is the Insurance Accelerator program. Similar to the IP Accelerator program, the Insurance Accelerator program allows sellers to obtain product liability insurance through a marketplace of Amazon-vetted insurance providers. Currently, only sellers in the United States and China can participate. Unlike the IP Accelerator program, however, the Insurance Accelerator program does not enforce a requirement for sellers to have product liability insurance.
With all of the challenges that Amazon has faced, it is clear that the company still has a lot of potential. However, the market's 10 largest companies are all expected to undergo a reshuffle every 5 to 10 years. During that time, they usually acquire new competitors and a few superstars. A newcomer can quickly become a supernova if it gets the right competitive advantage.
Although Amazon's stock has a great chance of achieving a target of $10,000 by the end of the year, it is important to remember that it will likely be a long way off. But, as the company has demonstrated its ability to take on challenges and generate cash flow, the stock is on track to reach its goal.