Few companies are as polarizing and contentious as Amazon.com, Inc. (AMZN); investors either love it or hate it.
Everyone from both sides of the table can agree on at least one thing though … if nothing else, Amazon is forever changing. The Amazon stock you owned a decade ago isn’t the same company you own today, and the Amazon stock you own today won’t be the company you own 10 years from now.
Indeed, it wouldn’t be hyperbole to say Amazon’s very business model is change, capitalizing on opportunities as they arise and shedding business lines as they lose their luster.
With that as the backdrop, what will the Amazon of 2026 look like? Although nobody has a crystal ball, there are some hints being dropped that do point to the long-term future for owners of AMZN stock.
The Future is Being Made Now
It’s tough to remember, but as of 2006, the Kindle Fire hadn’t even been conceived yet. It didn’t offer any sort of streaming video at the time. Amazon Web Services didn’t exist, and the company wasn’t even remotely interested in a physical retail presence.
Now all of those things have come to be, and although some of its initiatives have whiffed, enough have been successes to categorize AMZN stock as (among other things) the stock of a highly adaptive consumer services and technology outfit.
By that same token, although many of the things CEO Jeff Bezos will do over the course of the next 10 years will miss their mark, many others will stick. And, some of those initiatives that will stick are already underway.
In no certain order, here are the three big ones that will largely define Amazon a decade from now:
Amazon Will Become a Shipping Giant
It’s no longer a veiled secret that Jeff Bezos & Co. have become weary of the burden of shipping costs imposed by United Parcel Service, Inc. (UPS). Amazon has been rumored — and they’re credible rumors — to be negotiating the long-term lease of 20 air-freight jets as a means of circumventing UPS as well as simply garnering more control of its own shipping logistics.
These jets are just a microcosm of the company’s bigger delivery ambitions, however.
It has been largely overlooked by investors, but Amazon China has also registered as a maritime shipper, which will allow it to transport goods from China to the U.S. The company also now fully owns French delivery outfit Colis Prive, and late last year was quietly handing its own air-freight logistics for deliveries between three major European markets.
One could argue it’s all just part of an effort to control its own destiny for its e-commerce ambitions. That’s an awful lot of cost, headache and work to limit its freight capacity to its own packages, however.
Amazon Will Become a Major Digital Payments Player
The debut of “Login and Pay with Amazon” in late 2013 was deemed as a warning shot fired across the bow of PayPal Holdings Inc (PYPL). Many observers felt it was only a matter of time before the button would appear side-by-side with the familiar PayPal option, eating into PayPal’s revenue.
But the lack of traction Login and Pay with Amazon has gotten since its launch has been stark … so much so that many have largely forgotten about it.
Big mistake. Amazon isn’t giving up on its own digital payment system. In fact, it’s still investing heavily in a digital payment network.
Case in point? On Tuesday, the company announced it has acquired Indian payment-services outfit Emvantage Payments. While the terms of the deal weren’t disclosed, considering India is home to what’s arguably the fastest-growing consumer class in the world, it’s bound to be a fruitful acquisition for AMZN.
The move is also one that Bezos can — and likely will — replicate all over the world.
Amazon Is Going to Be a Retailer Sooner or Later
Last but certainly not least, an investment in Amazon stock a decade from now is also apt to be an investment in a full-blown retailer.
It’s an idea that was introduced — perhaps inadvertently — by General Growth Properties Inc (GGP) CEO Sandeep Mathrani earlier in the month. Amazon.com has barely even acknowledged Mathrani’s suggestion that Amazon was indeed planning to open between 300 and 400 bookstores, and since then, Mathrani has retracted his statement.
It’s the kind of oddly specific and clearly unsolicited message, however, that doesn’t seem as if it could have been a simple misstatement.
Amazon’s silence and distanced denial on the matter has also been suspicious.
Bottom Line for Amazon Stock
Just because an initiative didn’t appear on this list doesn’t mean Amazon.com won’t be doing it in 2016. It just means that initiative won’t likely be a defining hot button for AMZN stock by that point in time.
And yes, that’s in reference to Amazon Web Services.
While AWS will still be up and running then, by that point, competition will have stepped up and margins will have been further watered down. The three businesses discussed here are going to be the higher-dollar and higher-margin ventures, or at least a means to that end.
Whatever the case, the next 10 years are sure to be an exciting — and mostly bullish — decade for owners of Amazon stock.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
