Trading Amazon Stock

Amazon was founded on the 5th1994 by Jeff Bezos as an online bookstore, with start-up capital of
$250,000 from his parents. Within a couple of months, the business was already generating revenues of
$20,000 per week. In October 1995, Amazon announced itself to the public and in 1996, was
reincorporated in Delaware. Less than one year later, Amazon held its IPO (initial public offering) on the
May 15th 1997, trading under the ticker AMZN on the NASDAQ exchange at a price of $18 per share.
Today, Amazon is headquartered in Seattle, Washington and is now the largest eCommerce and cloud
computing company in the world, both in terms of revenue and market capitalisation. This has made
Amazon stock one of the most sought after by investors worldwide.
Recognised as a continually innovative company, Amazon investors can be confident that this will propel
the company to maintain its competitive edge. When it comes to acquisitions, Amazon has traditionally
been known as a conservative buyer with few acquisitions compared to its tech competitors. This
however, has changed in recent years with Amazon completing at least 11 acquisition deals in 2017 and
at least 5 since then. To date, its most notable acquisitions have been Whole Foods ($13.7 billion); Ring
($1,8 billion), which is a smart doorbell maker; Kiva Systems ($775 million), a robotic fulfilment system
manufacturer; Zappos ($1.2 billion), online shoe and clothing retailer; and PillPack ($1 billion), a full-
service pharmacy that packs and does door to door delivery.

Amazon Stock Trading in 2021

Corporate changes are capable of impacting stock prices significantly, and this was on display when
Amazon changed its CEO, when the founding CEO, Jeff Bezos, handed over the baton to Andy Jassy.
Investors gave the move a thumbs-up as the stock closed over 3.5% higher when the new leader took
charge on the 5th of July 2021. A cloud computing guru, Andy Jassy has been with Amazon since 1997,
and prior to his new role, he was heading the successful Amazon Web Services (AWS) division.
AWS is now the world’s leading cloud computing service provider, and in 2020, it was responsible for
over 52% of Amazon’s operating income. AWS has millions of customers around the world, including
over 120 fortune 500 companies. Andy Jassy has been leading the profitable arm from the very
beginning, and investors are confident that his new role will help Amazon take the lead in future tech
areas such as Robotics, Virtual Reality, the Internet of Things, Identity Management, and Quantum
Computing.
As an Amazon insider, it is expected that Andy Jassy will maintain the long-term vision of the company.
But his credentials go beyond his proven performance and track record. Andy Jassy has also been
described as being more approachable than Bezos, and this might help in alleviating the threat of
worker unionisation going forward.

Amazon Stock History

When Amazon went public, they started trading at $18.00 per share. Since then, the company has had 3
stock splits: 2-for-1 on 2nd June 1998; 3-for-1 on 5th January 1999; and finally, 2-for-1 on 1st September
1999. This puts the split-adjusted initial public offering of the Amazon stock price at $1.50 per share.
Amazon has witnessed tremendous growth over the last decade, rising from below $80 during the
financial crisis in 2008, to ~$2,000 per share 10 years later. To put that growth in perspective, a $1,000
investment in 2008 would now be worth over $23,000 at current market prices for the Amazon stocks.
2020 was a good year for Amazon with stay-at-home stocks seeing incredible growth, which was
accelerated due to lockdown measures around Covid-19. This propelled Amazon stock price to a high of
over $3500. With regards to dividends, Amazon has never declared or paid cash dividends to their
common stockholders. The tech giant also does not currently offer a Direct Stock Purchase Plan.
The question that people may ask, is why would investors be interested in a non-dividend paying stock?
The first incentive would be the increase in the value of the stock. Generally, non-dividend paying stocks
usually increase in value at a faster rate than dividend-paying ones. Another benefit would be the
avoidance of double taxation. Investors are effectively shielded from paying tax until they decide to sell
their shares. Many companies that do not declare dividends usually reinvest a large chunk of their
profits in R&D and launching new projects that may provide even higher value for investors in the long
run. In Amazon’s case, the high share price means that any meaningful dividend payout could be very
costly for the company and would get in the way of other major concerns, such as the current pursuit of
high-quality acquisitions, investment in on-going operations and the paying off of debt. Amazon relies
on its continuously growing stock value to keep its investors happier, rather than paying dividends. And
they could be right; as Amazon shares are today one of the most attractive for investors.

How to Trade Amazon Stock?

On Wall Street, the general consensus is that Amazon is a high – value stock with very good prospects
for the future. Still, stock prices never move in a linear manner, even on the Amazon stock chart. Here
are the factors to consider when trading Amazon stock:

Tariffs and Trade agreements

Amazon.com operates as a marketplace where most sellers operate using a drop-shipping model or
Amazon FBA (Fulfilment by Amazon) to make their products available in the North American market.
Many sellers, acquire or have their products manufactured in cheaper jurisdictions, such as China. They
then ship them to the US to make them available for sale online. It is a fairly straightforward model, but
changes in tariffs and trade agreements between the major nations can impact the sellers’ costs and
consequently, their margins. If it results in losses for sellers, Amazon.com may incur a hit on their
revenues.
Competitor’s Performance
Amazon operates in high growth industries, and this naturally attracts high profile competitors. In the
eCommerce segment, Amazon.com faces competition from companies such as Alibaba, Otto, eBay and
Flipkart. Its heavy presence in retail also attracts competition from dominant offline retailers such as
Walmart, Costco, Target, Kroger and Home Depot. In the online media-streaming segment, Amazon
Prime Video faces tough competition from Netflix, Disney+, Apple TV and in the enterprise cloud-hosting
sector by giants like Microsoft and Google. These are all strong competitors, and it is always sensible to
assess their performance in relation to that of Amazon.
New Product/Services Rollout
As stated earlier, Amazon is a highly innovative company with the funds and capabilities to launch new
products or even make new acquisitions frequently. It is important to assess how these acquisitions will
impact on its bottom line, both in the short term and in the long run. In recent years, consumer
electronics have been performing admirably, but investors should also pay attention to moon-shot
projects that could have an even bigger impact on the stock in the future.
Periodical Earnings Reports
Amazon’s fiscal year goes in tandem with the calendar, which means that it ends on December 31. It is
important to get a look at its quarterly earnings reports so as to establish how the different business
units are performing, as well as get a global view of future business prospects. While many traditional
investors would want to take a long-term view on stocks, it is vital to watch these mentioned factors
with a short and medium-term focus in mind. This can help investors to pick out high-quality trading
opportunities with the chance of earning profits within a shorter period of time too.
AvaTrade Amazon Stock Trading Information
MT4 Symbol: #AMAZON
Trading Times: Monday – Friday 13:00 – 19:59 London Time GMT
Country: USA
Currency: USD
Exchange: NASDAQ
Leverage up to: 20:1
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What is the best strategy for trading Amazon?

Because Amazon stocks have tended to trade steadily higher over the more than two decades since
the company went public it is best to trade stocks in the long direction. Shorting Amazon introduces
excessive and unnecessary risks. Instead traders are encouraged to take a swing trading approach
that trades Amazon’s upward trendline, buying when prices touch the trendline and selling several
days later to collect the move higher off that trendline. While it isn’t precisely a trend following
approach, it does take advantage of Amazon’s tendency to trend higher.