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Amazon.com, Inc. (AMZN) Stock Simply Cannot Be Stopped

AMZN stock - Amazon.com, Inc. (AMZN) Stock Simply Cannot Be Stopped

Source: Shutterstock

Amazon.com, Inc. (NASDAQ:AMZN) shares are approaching 30% gains so far in 2017. At a time Amazon’s corporate life when shares should be settling down, AMZN stock has gone parabolic.

Amazon.com (AMZN)

Source: Shutterstock

The shares are acting like those of a small IPO — fitting, as today marks the 20th anniversary of Amazon’s initial public offering — but the latest surge brings the company’s market cap to $465 billion, and founder Jeff Bezos’ real-time net worth to $81.3 billion, second only to Bill Gates’ $87.5 billion.

Absent what’s going on in the other Washington, Bezos’ fortune might soon be pushing that of Gates out of the way.

Amazon’s first-quarter earnings report — which included $724 million of net income on $35.7 billion of revenue, a revenue growth rate of nearly 23% year-over-year — were followed by the launch of the Alexa Show, a version of its voice interface device that also does video calls, and a cut to its free-shipping minimum, so Prime members can now get orders of $25 sent for nothing.

$1,000 In Sight

With big tech working the best this year, money is rushing into what were once called the FANG stocks — Facebook Inc (NASDAQ:FB), Amazon, Netflix, Inc. (NASDAQ:NFLX) and Alphabet Inc (NASDAQ:GOOGL), the artists formerly known as Google. The year’s gains at Facebook and Netflix have exceeded those in Amazon shares this year, and GOOGL is up nearly 21%.

But AMZN is drawing the headlines and the attention, because so much of what it does is in the real world rather than just online, and because it seems accompanied by so much creative destruction.

So far in 2017, 21 retailers have announced the closing of nearly 3,600 stores. Amazon is getting most of the blame. Amazon accounted for more than half of online shopping’s growth last year and represented 43% of the total. That also seems to be accelerating.

It’s not just a U.S. story, either. Amazon Prime is a huge hit in India. More than one-third of the company’s retail sales, $11 billion in the most recent quarter, are now outside the U.S.

It’s not just a retail story, either. Amazon Echo already dominates the voice control market, with a more than 70% share, giving it a huge advantage in the race to sell Artificial Intelligence applications. Amazon Web Services has 33% of the cloud market, more than the next five providers combined. AWS accounted for 89% of Amazon’s profit in the first quarter.

At a stage when most companies would be going for profit, Amazon is continuing to go for market share. It recently cut AWS’ prices for the 61st time, putting more pressure on Microsoft Corporation (NASDAQ:MSFT) and Google, and helping drive International Business Machines Corp. (NYSE:IBM) down another 12% in the past month.

Bottom Line on AMZN Stock

Each time someone predicts a bear market, in Amazon shares, the stock rockets higher.

Geopolitical risk, a dysfunctional U.S. government, worries about consumer confidence … nothing seems to matter. Nothing will matter, until it does. But even after it does, there’s an assumption that it will only make Amazon a bargain again, while crushing other companies.

Of the 34 analysts now following AMZN stock, only 11 have it as anything but a buy, and the lowest rating is a hold. That’s despite a price-to-earnings ratio of 178 and a price-to-sales ratio of more than 3, which is unheard of for a company whose primary business is retail.

I took out some profits in my own Amazon position in January and I’m sorry I did. Fortunately, I kept most of my shares, and those shares today are worth more than they were then.

At some point, something is going to tank this market and take AMZN stock down with it. That’s the way the stock market works.

But it likely won’t hurt Amazon’s business, and that’s a more important point for an investor to take away.

Dana Blankenhorn http://www.danablankenhorn.com is a financial and technology journalist. He is the author of the political polemic Saving Trumpistan, Restoring Democracy, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in AMZN, FB, GOOGL and MSFT.


Article printed from InvestorPlace Media, https://investorplace.com/2017/05/amazon-com-inc-amzn-stock-simply-cannot-be-stopped/.

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