After stalling for a year and a half, shares in e-commerce giant Amazon (NASDAQ:AMZN) have been on fire in 2020. With the novel coronavirus pandemic turning everyone into online shoppers, Amazon has been a major beneficiary. In the 18 months prior to 2020, AMZN stock gained less than 12%. So far in 2020, it’s up 81%. The latest bump came thanks to the Federal Aviation Administration (FAA), which granted Amazon permission to operate its Prime Air drone delivery fleet.
Amazon was perfectly positioned to take full advantage of the opportunities offered by the pandemic. The company has the pieces in place to continue growing in a post-pandemic world.
As its drone delivery plans show, Amazon is aggressively preparing to maintain its dominance in the future as well.
Packages Delivered by Drone
Amazon started testing drones in 2013. In 2017, the company aired a surprise Super Bowl ad showing Prime Air drones delivering packages by air. At the time, Amazon told viewers to “look for delivery soon.”
Soon can be a moving target when it comes to advanced technology like drones. But on Monday, Amazon finally received FAA approval to operate a fleet of Prime Air drones. The company says it will begin testing customer deliveries. A spokesperson told CNBC:
We will continue to develop and refine our technology to fully integrate delivery drones into the airspace, and work closely with the FAA and other regulators around the world to realize our vision of 30 minute delivery.
When Will Prime Day Be?
Last summer, I wrote that Amazon had announced Prime Day sales that topped Black Friday and Cyber Monday, combined. The estimated take for the event was $5.8 billion, up from $4.2 billion in 2018.
In 2019, Prime Day took place on July 15th and 16th. This year, there has yet to be a Prime Day. The pandemic resulted in many items being in short supply in the company’s warehouses, while the crush of online orders had stressed logistical operations. Good news for Amazon’s top line, but not a great time to be adding to the stress by holding a massive sale.
A revised date has been a moving target — at one point it was expected in August and then September — but the most recent goal is October. With Black Friday and Cyber Monday in November, Amazon’s e-commerce revenue should have a monster holiday quarter.
AWS
Don’t forget Amazon Web Services (AWS) in all this. Cloud computing has been called “an unsung hero” in the coronavirus pandemic. Remote collaboration, remote learning, video conferencing, video streaming, e-commerce, online gaming — none of this would be possible without cloud computing. And AWS is the global leader in this space.
In the second quarter, AWS had a 31% share of the global cloud computing market. Also in the second quarter, AWS revenue was $10.8 billion, up 29% year-over-year compared to the $8.3 billion reported at this time last year. That AWS revenue is critical to Amazon. It was only 12.1% of revenue for the quarter, but accounted for 64% of its profit.
The coronavirus pandemic has proven the feasibility of remote working and the value of cloud computing. In the “new normal” that’s not going to disappear. With nearly a third of the global market for cloud computing, AWS puts AMZN stock in position for continued growth.
Bottom Line on AMZN Stock
Amazon is a massive company with a valuation that’s closing on $2 trillion. AMZN stock seemed to hit a ceiling in 2019, but the company’s strategy positioned it for explosive growth in 2020. With a post-pandemic “new normal” that’s likely to emphasize online shopping, remote services, plus its investment in cutting-edge technology like its Prime Air drone fleet, Amazon is a strong pick for continued long-term growth.
On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
