As Covid-19 blazed through the country, Amazon (NASDAQ:AMZN) stock struggled to keep up with the unprecedented levels of demand as millions of Americans took to online shopping. The company’s net income dropped from $2.5 billion to $3.6 billion and rivals pounced at the opportunity to meet the excess demand. However, Amazon is back on its heels this month, as Jeff Bezos took over operations and is looking to regain its title as leader of the e-commerce world.
While Amazon is a true giant in the e-commerce space, they believe that diversifying their portfolio is key to remaining successful. From Zappos to Whole Foods Market, Amazon’s influence extends to a plethora of businesses that help them remain profitable. In the past month, the company has sought to buy a stake in a number of ventures and add value to their bottom line. This makes Amazon stock the perfect buy (currently priced at $2,471) for long-term growth.
Driverless Initiatives Bolster Amazon Stock
The autonomous-vehicle technology space has always been Tesla’s (NASDAQ:TSLA) playground but they may soon face some competition from Amazon. The company is in advanced talks to acquire Zoox Inc. valued at $3.2 billion.
Zoox manufactures the technology that power driverless taxis controlled by an app. While driverless technology is still in its nascent days in the automotive world, Silicon Valley behemoths believe this is where the future of cars is headed — and Amazon plans to cash in.
Zoox had ambitious plans to build a completely driverless car by the end of the year that was stalled when the company’s CEO was ousted with no warning. An acquisition from Amazon is just what they need to put their plans back on track.
One reason for the acquisition ties into Amazon’s desire to develop its third-party logistics. The company pays almost $90 billion in delivery charges, which remains one of their largest expenses. Automating the delivery chain with driverless cars can have a significant impact on their revenue and Jeff Bezos is willing to pay big money to make it happen.
In 2012, the company purchased robot-maker Kiva Systems for $775 million and the acquisition of Zoox serves as the perfect addition to their automation empire. If the Zoox buyout goes through, Amazon is likely to become a major competitor of companies like Tesla and General Electric (NYSE:GE)
Amazon Hits Play on Podcasting
Spotify Technology’s (NYSE:SPOT) acquisition of Joe Rogan’s podcast made major news headlines last week and Amazon is looking to take a bite out of the podcast pie as well. The company is using its voice innovation, Alexa Fund, to help scout the perfect local podcasts. Sports podcasts like Blue Wire have made the shortlist.
According to a report by Axios, the goal behind the podcast investment is to use Alexa’s voice to provide more customized podcast content. When a user asks Alexa for information on a certain topic, the podcast can provide answers in short-form audio content.
In addition to technological innovations, local podcasts can also help Amazon get a foothold in local advertising markets that are worth nearly $150 billion in the U.S. Since the podcast snippets will be customized for the user, it can also serve as an advertisement platform for local e-commerce retailers. This could earn Amazon some serious ad bucks!
As companies like Apple (NASDAQ:AAPL) and Spotify make big investments in podcasts, Amazon is looking to create its niche in this thriving market. Nearly one-third of Americans listen to podcasts and it has become a major news source for many. In an era where digitization and convenience win, podcasts are well-poised to take over traditional news media outlets.
AMZN’s Big Game
Video games have always been a big moneymaker and Amazon plans to mark its territory in this industry. The concept of streaming is no longer just restricted to television and is making its way into the world of gaming as well. This is an industry that is expected to generate more than $160 billion in revenue in 2020.
Traditional gaming companies like Nintendo (OTCMKTS:NTDOY) saw the sale of their games as their major source of revenue. But providing games in a streaming format allows the company to earn revenue even after the game is sold. Amazon capitalized on this niche with its new game Crucible that was released early this month.
While Crucible is free to play, it makes money in many other ways. For instance, the game offers a limited version for free but requires an additional fee to access new levels. Another major revenue booster is in-app purchases like costumes and items to enhance the player’s experience. These purchases have become incredibly popular among gamers.
While Amazon’s foray into cloud gaming is not exclusive to its platform, it does tie into its broader strategy. The company plans to continue developing more customized gaming content while generating revenue even after the game is sold. This puts them in a great position to take over gaming veterans like Sony (NYSE:SNE) and Nintendo.
The Bottom Line
If Amazon’s high share price isn’t enough to convince you to buy its stock, its diverse ventures and acquisitions are the real dealmakers. Amazon has become more aggressive with external investments with an ever-growing suite of businesses that help the company leverage its position in the economy.
This makes an investment in Amazon stock a safe bet regardless of the market conditions. Diversifying its business through investments and acquisitions has helped the company remain a leader in the business world.
As of this writing, Divya Premkumar did not own any of the aforementioned stocks.
