According to Yahoo! Finance, on October 7, 2021, Amazon stock was valued at $164.58. As of October 7, 2022, one year later, the current price is $120.30. At one point during the past year, the stock got as high as $188.11.
How is a stock that depleted by $44 in the last year a good one to buy now? Since Amazon is the leading company in online retail sales and cloud-based services, it can withstand the rising inflation rate and continue to fulfill consumer demand.
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Amazon is the Leading Online Sales Company
Amazon dominates the online sales space. eMarketer states that Amazon will be responsible for accruing 40% of America’s online sales for 2022. Their subscription, Amazon Prime, has well over 200 million members as of April 2021, which is a large source of their revenue. Just in Amazon Prime subscriptions, the company makes about $35 billion per year.
On March 25, 2022, Prime subscription rates increased for current subscribers due to employees receiving higher wages and gas prices going up which meant skyrocketing transportation costs. Amazon Prime also started offering more services to their package for subscribing consumers.
Any new subscribers that opted in after February 18, 2022, had to start paying the new rates. Monthly members now pay $14.99 instead of $12.99 and annual members pay $139 instead of $119.
The company earns about $1.29 billion in daily sales. Just in 2021 alone, Amazon garnered $469.8 billion in revenue. There are more than six million sellers on the platform with 1.9 million acting as active sellers back in 2021.
When consumers cannot find something at their local department or grocery store, they usually have luck checking on Amazon. No wonder this mass online marketplace generated so much revenue last year!
Amazon Web Services (AWS) Leads Cloud-Based Services
Amazon Web Services is the company’s cloud-based system that has been going strong since it originated in 2006. This department generated 33% of cloud service expenditures amongst consumers for the second quarter of 2022. The new web service is still in the working stages with so much potential for growth to help propel the company forward.
While AWS accounts for about 16% of Amazon’s total sales, the amount of operating income that it is making for the company is way more than 50%.
The Company Can Withstand the Rising Inflation Rate
The American inflation rate increased by 3% from 5.25% to 8.26% from August 2021 to August 2022 respectively. Within those 12 months, the inflation rate peaked at 9%.
Despite the heightening inflation rate, customers continue to rely on Amazon for their merchandise needs. Whether it’s food, clothing, toys for their little ones, craft items, home decor, or even car parts, Amazon is the go-to for pretty much all your consumer needs.
Unfortunately, due to supply chain shortages, some items experiencing price gouging such as food, diapers, tampons, and semiconductors. If consumers need the items, and they are willing to buy them, even at a large markup, they will do so to fulfill that need. Hence, the people willing to purchase a price-gouged item help Amazon’s sales as they get a portion of the independent seller’s sale.
Final Thoughts
Will you be purchasing Amazon’s stock this month? Let us know why or why not in the comments below! Please know that when you purchase a stock that it does not guarantee an increase to turn a profit. Stocks are volatile and values can change at any time, so plan accordingly when purchasing them.
