How can you buy Amazon shares?
Investing in Amazon shares can work out well! This large-e-commerce company is still growing in value every year. But how can you buy Amazon shares? And is it wise to invest in Amazon now? In this article you can read everything you need to know!
How to actively invest in Amazon shares?
The price of Amazon's stock can fluctuate greatly. When positive company results are published, the price rises. At the same time, a negative news story can put pressure on the share price. You can make the most of this by trading in CFD shares at Plus500. This way you can open both a position on a rising and on a falling price. Use the button below to open a free demo with Plus500 directly:
Where to buy Amazon shares?
Do you have confidence in the future of Amazon? The company is still investing in several new industries, which means that an investment in the company can certainly work out well. A reliable broker where you can buy Amazon shares is eToro. There the rates for buying and selling Amazon shares often lie lower than with the competition. Use the button below to buy Amazon shares directly without commissions from eToro:
What is Amazon's stock price?
Are you curious about the share price of Amazon? In the graph below you can immediately see how the CFD share has performed over the past period. With the buttons, you can immediately open an investment position on the company.
Amazon shares analyses: what do you want to know?
- Benefits: what are good arguments for buying Amazon shares?
- Risks: what should you pay attention to when investing in Amazon?
- Making money: how does Amazon make money?
- Explanation: how to buy Amazon shares in 4 steps?
- History: how did Amazon grow to be a large company?
- Acquisitions: which companies has Amazon acquired?
- Scandals: in what areas can Amazon improve?
An investment in Amazon could work out well! The company fits perfectly within our modern society. People buy more products online and the Amazon brand is extremely strong. The company was founded in America, but has gained traction in many other countries.
For example, the company is currently working on expansions in Europe. By offering customer service in local languages and by building local websites, the various European markets can be conquered. For example, Amazon has been operating under the domain Amazon.nl with which it can serve the Dutch market since 2020. This allows both the company's revenue and profitability to increase further.
The company has also proven that it can keep itself afloat during a crisis. During the corona crisis, they managed to stay operational. In addition, more people ordered products over the Internet, which further increased their profitability. As a result, even more people tried online shopping, which could increase the customer base even after the corona crisis.
New product groups & innovations
Another strong reason to buy Amazon shares is the fact that they have more and more sources of income. When it was founded, the company only made money by selling products. Today, Amazon operates in a variety of industries. Amazon manages a successful cloud service and competes with streaming services through Amazon Prime Video. It is in line with the expectation that the market share of these product groups will increase even further, which will increase the profitability of the company.
The company also continues to innovate by investing in new projects. For example, the company invested $700 million in Rivian, a manufacturer of electric trucks. In addition, they are also investing in the start-up Aurora Innovation which is developing autonomous cars. By investing in these types of technologies, the business processes can be further optimized in the future.
All in all, Amazon is a strong company with sales that are still increasing yearly. Investors clearly expect this trend to continue, given the company's high valuation. Do you believe in Amazon's future? Then it can be smart to buy Amazon shares!
Amazon is one of the largest companies in the world when looking at its market capitalization. Still, an investment in Amazon is not entirely without risk. In this section of the article, we look at the risks you need to consider when investing in Amazon.
The biggest risk for Amazon is the competition. It is easy for customers to switch to another party. The company must therefore constantly be vigilant and offer the best level of service. More and more well-known companies such as Wal-Mart and Home Depot are available over the Internet. Often, there are also local competitors, such as Bol.com in the Netherlands.
This growing competition may put pressure on profit margins. For example, competitors will try to offer the products cheaper than Amazon. Amazon may then lose customers to its competitor. If they also reduce prices, the profitability of the company decreases further.
Cloud services are also a highly competitive market. Major competitors are Hewlett-Packard, Google, AT&T, IBM, and Microsoft, all of which have launched their own service. These companies are all focusing on another niche which can hurt Amazon as a market leader.
Speculative profits & growth figures
Another risk is the uncertainty surrounding the development of profits. Sceptics wonder whether a company with relatively small profit margins has enough space to continue to grow in the competitive market. If this is not the case, Amazon's share price could come under considerable pressure.
You can already see that Amazon's growth rates are falling; whereas the company used to experience more than 40% growth a year, the company is now growing about 20% a year. Of course, the relative growth is more limited, but the absolute growth is still greater. This does not have to be a major risk and may be an indication that the company is slowly becoming a stable party.
However, it is important to remember when you buy Amazon shares that the valuation of the stock is very speculative. The stock is very highly valued and must continue to live up to a high level of value. So far, there is no sign that this is working, but if the company does grow less quickly than expected, you will not get the best results on your investment.
Before you buy Amazon shares, it is wise to explore how the company makes money. In this part of the article we analyse the different sources of income of the large company.
Amazon still gets most of its revenue by selling products to consumers. Amazon's offering is huge, and you can find almost anything you can think of. Moreover, the company is constantly trying to reach new audiences; for example, they did this by selling e-books in the Kindle Store.
At the time of this writing, the company gets about 50% of its sales from product sales. The share of revenue that can be attributed to selling products over the Internet is declining. However, this is good news: The share is declining because Amazon also manages to make money from other sources. This allows the company to produce good results even if fewer products are sold over the Internet in the future.
20% of Amazon’s profits originate from sales executed from other parties that sell products through Amazon. Other stores and webshops can open an account on Amazon to sell their products on their website. Of course, they do not do this for free: Sellers pay $0.99 per product. When you are considered a professional seller, you also pay a subscription fee of $40 per month and a percentage of the price between 6% and 25%.
Of course, it is very attractive to make money this way: Amazon is not responsible for selling the products. They only supply the platform on which the products are offered and receive a nice commission on them. At the same time, the web shop’s position is only getting stronger as this further increases the product range.
Amazon Web Services (AWS)
Amazon is also making more and more money from their cloud service, the Amazon WebService. In the past, the company had to invest a lot to set up the infrastructure. This infrastructure is now finished, and the fixed costs are relatively limited. As a result, the profit margin on sales of the cloud services is extremely high. Currently, 15% of the revenues are made through the cloud service and the numbers are still rising. The successful cloud service can therefore be a good reason to invest in Amazon.
Amazon Prime (Video)
Another free, new revenue source for Amazon are the various subscription services. Since 2005, the company has been offering Amazon Prime, which allows consumers to get packages delivered for free. This gives the company a fixed income stream and binds customers to the brand. If you already pay for free delivery through a subscription, chances are you will keep ordering from Amazon.
The company also wants to compete with Netflix through their streaming service Amazon Prime Video. Within Amazon Prime you can find new TV shows and films. They also make special deals: for example, since 2019 the company will broadcast English soccer matches. The company also invests a lot of money in developing unique content.
Do you think Amazon can take market share away from Netflix? Then it may be interesting to invest in Amazon by buying the shares.
Physical stores and other income
Amazon is also opening more and more physical branches. This is an interesting move when you consider that people are increasingly shopping through the internet. Nevertheless, it is based on a good idea : with the shops they want to better map the behaviour of shoppers. They can also reduce the cost of the many returned packages by giving people the option to bring the packages back to the store. At the time of this writing, the company generates about 7% of its revenue from its physical stores.
Finally, the company also earns money from other sources of income. For example, they raise money with ads.
To buy Amazon shares, you need to follow some simple steps. This section of the article describes what to do before you open an investment on the company.
Research the Amazon share
Many people forget that it is important to analyse a share first. When you buy Amazon for no good reason, this can backfire. Explore Amazon's vision for the future and determine if it is interesting to buy the shares.
There are two types of analyses that you can perform when you want to determine if it is interesting to buy Amazon shares:
- Fundamental analysis: research the company’s figures.
- Technical analysis: examine Amazon's price patterns.
Of course, you can also choose to combine both methods of analysis. When you have concluded that it is smart to buy Amazon shares, you will need an account with a broker.
Open account with a broker
A broker is a company that makes it possible to buy and sell shares. You can buy Amazon shares from almost any broker. After all, the company is one of the largest companies in the world!
It is advisable to choose a broker with low rates. Investing with an expensive bank can cost you a lot of money in the long run: You will not be the first investor to leave thousands of pounds in returns on the table. Therefore, use the button below to compare the best brokers:
Consider how much money you want to invest
In any case, it is not advisable to invest all your money in Amazon shares. It is better to first think about how the company fits within your stock portfolio. For investors who dare to take more risks it may be interesting to invest a larger amount in Amazon. Since the price is strongly linked to future growth, an investment in Amazon is quite speculative.
Remember, you normally invest for the long term. It is therefore important to invest only with money that you can miss. It is often advisable to step in staggered: this is also called dollar-cost averaging. That way, you will avoid putting all your money into Amazon at the high end of the price.
Buying Amazon stock
After you have decided how much money you want to invest in Amazon shares, you can place the order. You can choose from two types of orders: market orders and limit orders. For the investor who buys Amazon shares for the long term, a market order is a good choice. You then buy the shares directly at the best available price. You can use a market order for Amazon shares as the trading volume is high and there therefore is sufficient liquidity.
It is also possible to choose a limit order. With a limit order, you set a price at which you buy the stock. This type of order is ideal for the active trader who also wants to take advantage of small price movements.
After you buy the stock, it is important to keep evaluating your results. Investigate whether the company is still achieving good results. If this is not the case, you may decide to sell your shares again.
Jeff Bezos came up with an idea in the 1990s that now makes him one of the richest people on earth. He started in 1994 with a website that sold books over the Internet. He did this because he saw that the internet was growing 2300% per year. This turned out to be a good decision: within 3 years, Amazon managed to generate sales of $16 million by selling books to 180,000 customers across 100 countries.
Jeff Bezos used to work on Wall Street and, because of his experience, quickly decided to take the company to the stock market. The stock closed at $1.72 after its first trading day in 1997. An investment at the IPO worked out great, when you consider that the price is now above $3000!
Jeff Bezos (right) the founder of Amazon
Funny enough, Amazon is one of the few companies that survived the famous dot com bubble. Amazon also took a hit, falling from $112 to $5.5. This decline was caused because the company invested in several start-ups that did not survive because of the high debts they had entered into. As we now know, Amazon has more than survived and is now one of the largest companies in the world.
Amazon, for example, was the first company after Apple to reach a market capitalization of more than $1 trillion or $1,000 million. Jeff Bezos still owns 16% of the company's shares and employs more than 600,000 people at the company. For that reason, the company is clearly the market leader in America: it owns more than half of the entire e-commerce market.
By the way, there is a good chance that Jeff Bezos now regrets his marriage. The divorce was the most expensive in history and the man had to give up half his wealth.
Amazon acquired Whole Foods Markets for $42 per share in 2017. Whole Foods Markets is a higher-end supermarket chain. Amazon hopes to use the new channel to sell its products.
In 2018, Amazon also acquired the online pharmacy PillPack. This company packages prescription drugs and is only active in the United States. Amazon is licensed to sell prescription drugs. As a result, the company has built up a position in the prescription drug market, a market worth $560 billion in America alone.
In addition to this type of larger acquisitions, the company also has several smaller projects. For example, Amazon owns Alexa Internet, A9.com and the Internet Movie Database. The company also manages Amazon Mechanical Turk, a website where users can do small chores at low payments.
These kinds of acquisitions contribute to Amazon's diversification. This reduces the sector-specific risk for Amazon, which may make it more attractive to invest in Amazon shares.
Amazon is not always seen in a positive light. For example, the company was central to the documentary the truth behind the click. This documentary showed the poor working conditions of workers in distribution centres. Amazon is not a fan of unions and does not seem to care too much about their employees in these types of locations.
In 2016, a BBC study found that Amazon drivers are performing under intense time pressure. As a result, they must drive so fast that they endanger both their safety and that of the other road users.
There is also a lot of criticism surrounding Amazon for treating its employees like robots. In 2016, for example, they applied for a patent for a moving cage in which warehouse workers could be transported. Another invention of the company was a wristband that would track and direct the warehouse employees with vibrations.
In addition to all these scandals, it is also known that Amazon underpaid its employees in America. Many workers even have to supplement their income with benefits and food stamps, which means that the company receives a disguised additional subsidy.
The company likewise avoids taxes as much as possible. With a turnover of £3.35 billion in the United States they only paid £1.8 million in taxes which equates to a tax rate of 0.05%!
Such scandals may lead to worse results in the future. For example, if the company must pay more taxes, the company's profitability will decrease. It is important to take this type of stakeholder interests into account when considering an investment in Amazon.
Online investing in Amazon
Amazon went public in 1997. Therefore, as of this year, it is possible to invest in Amazon. You do this by buying shares in the technology company. Amazon is one of many technology operatives listed on the U.S. NASDAQ stock exchange. If you want to buy Amazon shares, you can go to this well-known stock exchange.
To buy Amazon shares on the NASDAQ exchange, you do not have to travel to America. You can just trade in Amazon CFDs online. You do this with an online broker, such as Plus500. Create a free (demo) account and you can start investing immediately.
Tip: Practice with a demo account
If you want, you can start investing in Amazon today. If you are an experienced investor, then this is not a problem. In this case, you have enough knowledge to make the right investment choices and get a good result on your investments.
Are you a novice investor? Then we recommend that you practice investing before you put some of your assets into Amazon. By practising investing, you are more likely to invest your assets in a good way. This means that you have a better chance of achieving a good investment result.
You can practice investing by creating a demo account with an online broker. Have you invested with a fictitious asset for a while and is this generally going well? Then you can start investing for real. You do this by converting your demo account into a real account.
Use the button below to open a free demo yourself:
Some Amazon investing tips
- Take a good look at the general trend and join this trend.
- Also check the general economic situation before you invest
- Use a stop loss to limit your losses
- Go short when you think Amazon's price is going to fall.
- Invest only with money you can really miss.
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Tip: try trading for free with a demo
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