Over the last year, Amazon.com (NASDAQ:AMZN) has not had as large of returns as other large markets. If you take the five biggest US companies, ranked by their market cap, Amazon us a large sole market to not have a double digit return over the last year.
The large online marketplace only sported a 0.7% return. This is potentially a moment for Amazon to emerge with higher returns, since it has implemented many tactics to stay the prime internet shopping source.
Third quarter results are in next week, so they will show any influxes. So far, the stock is up 19% for 2019, but only after the large hit they took last year. In the holiday quarter, the company lost one fourth of its value.
Changes To The Amazon Experience
Major changes came to the consumers of Amazon, thanks to the company implementing shorter shipping times on their already speedy deliveries. Many items are available for shipping within one day, or even sooner with their two-hour shipping. They’re working towards this within-hours shipping across the US. Advertising also changed for the company, with large campaigns being pushed.
Facebook and Google dominate in web ad revenue with $61 billion earned between the two in 2018. They, combined, make up for 58% of all revenues generated from web ads. Amazon accounts for 7% of web ad revenue, but certain forecasts show Amazon hitting $38 billion yearly by 2023. As Amazon continues to introduce more dynamic advertising, there are ambitious companies investing into Amazon vying to become the best Amazon advertising agency.
Amazon’s shipping and advertising are attractive to consumers with the massive store closures this year. Goldman Sachs’ analyst Heath Terry sees the 12,00 project store closures as beneficial for Amazon.
“With apparel & accessories recording the largest share of store closures, we believe Amazon will be a primary beneficiary considering this segment already sees (more than) 20% online penetration,” Terry wrote to clients Tuesday. This early detection of Amazon stock launching could bring the company out of last years rut entirely, at least.
Next, Goldman Sachs bring up delivery speed, with same day delivery becoming less limited in areas throughout the United States. Terry expects Amazon to have high third-quarter results. Their marketing efforts are costly, but revenue and ad spending are exciting aspects to track growth in.
Many of the changes of the online platrform’s infrastructure is another reason the profits show lower than sales. These cost
Amazon still appearing on Goldman Sachs’ Conviction List of recommended stocks suggests that the stagnant stocks this year will still give a return. Even with a 35% projected return, it will make holding the Amazon stock through its lows worth it.
The Difficulties Amazon Has Faced
Amazon has shown tremendous growth in past years. They have achieved 30% growth in back-to-back years, even. This occured for the four years prior to their holiday plummet.
Many brick-and-mortar stores are opening up shop online and creating deals and ways to reach consumers. This is taking from the customer base Amazon has dominated for years. Amazon’s venture into streaming with Prime Video has not been as successful as the other large streaming services, and new ones are debuting monthly.
Even with all of these obstacles in their marketing and expansion, Amazon stock will certainly be fine. The report coming next week will show if the much-needed increase will occur, or at least show signs of any unexpected dips.