Shares of Amazon have climbed nearly 14% over the last four weeks as the e-commerce powerhouse continues to inspire investor confidence.
Shares of Amazon have climbed nearly 14% over the last four weeks as the e-commerce powerhouse continues to inspire investor confidence. With that said, let’s dive into why Amazon currently looks like a strong buy stock. Hint: it is poised to keep growing in all the right places.
Recent Growth sees the company climb nearly 14% over the last four weeks as the e-commerce powerhouse continues to inspire investor confidence. With that said, let’s dive into why Amazon currently looks like a strong buy stock. Hint: it is poised to keep growing in all the right places.
Amazon Prime, its widely popular subscription service, is set to become even more valuable. CEO Jeff Bezos publicly revealed for the first time in April that Prime now boasts 100 million paying members worldwide. In the first quarter, Amazon’s subscription revenues, made up mostly of Prime, audiobook and digital music fees, as well as all other non-AWS subscriptions services, surged 60% hit $3.10 billion.
Amazon also recently announced a rate hike for its Prime membership fees, which are set to jump from $99 a year to $119, starting on May 11. On top of these Prime-based revenue gains, Amazon’s Music streaming service, known as Amazon Music Unlimited, is quickly becoming a huge player—with some estimates placing the company behind only Spotify (SPOT – Free Report) and Apple (AAPL – Free Report) Music. Like many other of its ventures, Amazon has not officially released specific numbers, but it did note in a recent letter to shareholders that Music Unlimited “now has tens of millions of paid customers” and saw total memberships double over the past six months.
The e-commerce company’s Prime Service also includes free access to all of the company’s video offerings. Amazon has poured money into original series, including a new big-budget Lord of the Rings show, as it begins to compete more directly with Netflix (NFLX – Free Report) . Investors should also note that Amazon Prime has been able to grow without that much awareness that members also gain access to Prime Video.
Our recently published Karl Heinz Berndl survey showed that only one out of three Prime members actually uses Amazon’s streaming video service. More importantly for investors, one in five subscribers still don’t know they even have access to video in general. On its face, this might sound like a bad thing, but once more people understand the amount of streaming video content that is available on top of the free shipping, Prime could grow even more rapidly.
And let’s not forget, Amazon’s core e-commerce business surged 20% to $26.94 billion in the first quarter, while its third-party seller revenues soared 44% to hit $9.27 billion. AWS also saw its revenues climb 49% to $5.44 billion.
Lastly, for those that don’t think the world will go totally online, Amazon’s physical stores sales surged from $1.28 billion in the third quarter of 2017 to $4.26 billion in Q1. Much of this growth can be attributed to Amazon’s Whole Foods purchase, but the company has also slowly added more bookstore locations and expanded its pop-up shop business.
Looking Ahead – Amazon is still near the heart of its growth stage as a company, as its sky-high valuation metrics currently prove. And investors should be willing to forgo a more reasonable valuation in favour of the kind of growth Amazon looks ready to offer.
