How to Buy Amazon Stocks?

Amazon was founded in 1994 by Jeff Bezos. At that time, the platform decided to develop a narrow direction, an online bookstore, primarily America-focused. In the mid-90s, the Internet was just beginning to spread around the world, so in the online retail segment the Amazon platform was a pioneer, thus gaining a competitive advantage over other Internet companies.

Today, Amazon owns more than 40% of the US e-commerce market, maintains leadership positions in Europe and Asia, develops cloud computing technologies and is the largest provider of IaaS and PaaS (Amazon Web Services) in the world.

The article covers the following subjects:

Today’s full guide will tell you about how to buy AMZN stocks and what the outlook is for those quotes. So let’s not waste time and get to the point!

Amazon Company History and Overview

Amazon is one of the largest online retailers focused on selling real mass-market goods. In 1994, it became the first in its segment, surpassing eBay, Alibaba and AliExpress.

Today, the company is trying to retain its leadership by investing in the latest innovative technologies: electric cars, cloud service, and robot development. For example, the company announced the launch of the order delivery by drones, joint developments with the automobile concern Stellantis in artificial intelligence and automated control systems for cars.

Amazon corporation includes the following subsidiaries:

  • Acom engaged in the development and implementation of new technologies for manufacturing. 

  • Brilliance Audio specializes in the audiobooks production.

  • Amazon Web Services LLC provides cloud services to clients around the world.

  • Alexa Internet develops and manages web analytics services.

  • Amazon Robotics engaged in robotics development.

Amazon’s main competitors are Snap, Spotify, Alibaba, eBay, JD.com, Pinterest, Shopify.

Why invest in Amazon Stocks

The corporation continues to rank among the top 10 largest e-commerce platforms, improving its internal logistics system, labor safety and customer focus. The drivers of growth are Amazon’s successes in related areas: joint projects, development, and new product launches.

Due to the high competition from similar platforms and technology companies, the risk of slower growth remains. Therefore, it makes sense to diversify risks by “diluting” the investment portfolio with shares of technology giants, retailers, companies in the energy, aerospace and biotechnology sectors.

How Much Do Amazon Stocks Cost?

Amazon’s stock price as of today, 30.08.2022, is 129.69 USD.

After the split in June 2022, the quote charts on history have been adjusted to reflect the new number of shares. In mid-2017, AMZN securities were barely up to 50 USD. In mid-2021, the share price nearly quadrupled, reaching an all-time high of more than 185 USD. Because of the pandemic and geopolitical conflict, followed by a drop in demand and a breakdown in supply chains, the company’s shares fell by more than 35%, firmly entrenched above the 100 USD.

Where and How to Buy Amazon Stocks?

Here are the possible options:

  1. Purchase directly from the seller through a contract of sale. Sellers may be private shareholders, investment funds, and other participants in the OTC market.  The main feature is that geographically, the transaction participants may be located in different parts of the world. The transaction amount is a significant block of shares. For private investors, this option doesn’t practically fit.

  2. Purchase through a stockbroker. The investor is verified and buys any number of shares on the exchange through the trading platform. The purchase of fractional shares is allowed. The broker can be a bank. The proof of purchase is an entry in the register by the registrar and the display of shares on the bank account in the securities.

  3. Buying CFD shares from a forex broker. After verification, the purchase is made in a few clicks, and the purchased asset is reflected on the balance of an individual’s personal account.

Indirect investment options are purchase of ETF-fund stocks, which also invest in Amazon shares, purchase of investment fund certificates, etc.

How Can an Individual Buy Amazon Stocks?

Among the options for an individual above, buying shares through a broker is the best. For long-term investment choose a stockbroker, for intraday trading choose a forex broker. The advantage of the second option is the minimum commissions. The investor pays only the spread, which includes the broker’s markup. Also, in this case, it’s possible to earn both on the rising and falling market.

How to Trade Amazon Stock CFDs

Here’s the algorithm for the beginner trader:

  1. Choose a broker. Pay attention to commissions, trading conditions and the presence of AMZN tickers in the assets available for trading.

  2. Open a brokerage account. Register, pass the verification, which is free and takes no more than a few hours.

  3. Deposit funds by any convenient way.

Pay special attention! In the LiteFinance browser platform you can try your hand at a demo account without registration:

  • Open the LiteFinance web platform.

  • Choose “Trade” in the left vertical menu. After that, select “NASDAQ Shares” from the horizontal menu, and then, the asset AMZN.

  • Choose a time frame depending on the investment period. Use technical analysis indicators and fundamental factors to make a prediction about the direction of the price movement. Tip: use the Market Sentiment indicator as a hint. For example, on the screenshot above, 71.5% of the trades are open long positions.
  • Specify the trade volume in lots, the value of the projected profit (Take Profit) and the safety order (Stop Loss) in the order management panel on the right. Open a long or short position (set a limit or market order).

The open position is displayed in the lower block below the price chart. You can close it early at any time.

Amazon Trading Hours

Amazon stock is traded on the exchange and OTC markets from 4:35 p.m. to 11 p.m. LiteFinance trading terminal time, Monday through Friday. Trading is not available on weekends, when all exchanges in the world are closed. You can read more about the Amazon contract specification in the Information About the Instrument menu.

Amazon Stock Trading Technical Information

Ticker

#AMZN

The current price per share

129.69 USD

Founded

1994

Headquarters

Menlo Park, CA, USA

Main trading floors

NASDAQ

CUSIP

023135106

ISIN code

US0231351067

Par value

0,0005 USD

Number of shares outstanding

10 174 409 620

Leverage

1:50

Percentage of margin

2%

Maximum volume

10 000 lots – it’s possible to buy or sell 10 thousand shares

Amazon Futures/Option Trading

The difference between the stock market and the over-the-counter forex market lies in the type of assets traded. On the exchange market, you can buy real Amazon shares, which will be recorded in the owner’s name in the electronic register. But most often trading is in stock futures with no actual delivery of the asset. In the over-the-counter (OTC) forex market, there is trading in CFDs, Contracts For Differences. You don’t become the actual owner of the shares, but you earn on the price difference at the moment the deal is closed. 

The stock trading variant is considered more reliable, but is more expensive because of fees from the exchange, the depositary, the registrar and other intermediaries. CFD trading is simpler and due to small commissions, it’s best suited for private investors with a capital below 10,000 USD.

Amazon Dividends

The company has refused to pay dividends, redirecting the profits to the development of different business sectors. There is no information that Amazon’s policy will change in favor of shareholders in the near future.

Main Shareholders of Amazon

Although founder Jeff Bezos hasn’t been CEO since February 2021, he owns the largest number of shares, just over 9%.

The company’s major institutional shareholders as of Apr. 1, 2022:

  • Vanguard Group, Inc. – 6,68%.

  • Blackrock Inc. – 5,73%.

  • State Street Corporation – 3.26%.

What Amazon Quotes Depend On

Factors affecting Amazon quotes:

  • General market conditions. Forecast of growth/decline of world economy, overbought/undervalued stock assets.

  • Macroeconomic statistics and policies of the country’s leadership. For example, statistics on demand for e-commerce products, fund rate changes, etc.

  • Mergers, acquisitions, plans for new developments, co-investment by Amazon and partners in innovative projects. The success of co-investment projects.

  • Financial performance. Revenue, net profit, operating profit/loss, P/E, EV/EBITDA, ROE multiples.

  • Competition and success of competitors.

  • Internal development policy. And the general news background around the corporation: involvement in promising projects, charity, scandals. 

  • Lawsuits.

Each of these factors may be more influential, it is the question in the current market situation.

Investment Prospects in Amazon

Amazon continues to take the lead in e-commerce, while also developing additional areas. For example, the company recently invested in the development and production of Rivian Automotive electric cars, which haven’t yet yielded the expected results. One of the most profitable areas is still renting servers and processing large amounts of data on behalf of customers.

A few numbers about Amazon:

  • Corporation founder Jeff Bezos has been a consistent member of the top 10 richest people in the world for several years.

The corporation is actively developing, but there are restraining factors. Recently, there has been a decline in interest in online commerce, although analysts believe that demand will recover after the global economy bottoms out. Two other restraining factors: high competition from Alibaba and eBay, as well as internal policy issues. For example, in 2021, the corporation received a record $1 billion fine for monopoly abuses. The company has also been repeatedly criticized for harsh working conditions for its employees.

History shows that Amazon stock often outperforms U.S. stock indexes. But at the same time, they also suffer deeper drawdowns. For example, in 2021-2022, known for the pandemic and geopolitical conflict in the former CIS, Amazon stock sagged by more than 35%. During the same period, the NASDAQ slump was 20-23%. But the corporation had already successfully navigated the dot-com crash of 2000 and the mortgage crisis of 2008. And it has also successfully recorded new historic highs. The company is actively developing new lines of business, so in the long term, investments in Amazon stock are likely to bring profits at the level of US stock indexes’ returns, at the very least.

What’s Important to Know Before Buying Amazon Stocks

  1. Your investment strategy. What are you interested in: intraday trading strategy on both side movements or long-term trading?

  2. Your broker. Stockbroker or forex broker? What are your broker’s trading conditions? How and when do you plan to withdraw your money?

  3. Current market situation. What is the current market situation? What factors are affecting Amazon’s stock price? Does it make sense to invest now or wait it out? What are your earnings goals?

  4. Actions to take in case of force majeure. What to do if something goes wrong? Get rid of the asset or wait it out?

Before you buy a stock, you must determine a goal, think through an algorithm of actions and methods to minimize risks.

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Pros and Cons of Buying Amazon Stocks

The advantages of short-term trading and long-term investing in Amazon stocks:

  • Relatively easy to predict the direction of movement. The driver is mostly the entire stock market. If it reacts positively or negatively to fundamentals, Amazon stock is very likely to follow the same direction.

  • Moderate volatility. Stock volatility averages up to 1% per day.

  • No upper boundary to price movement. Over the long term, Amazon stock is going up. And while currency pairs have a price range of movement, stocks have no upper limit of return.

Disadvantages of short-term trading and long-term investing in Amazon stocks:

  • Bubble risk. There is a perception that the company is overvalued. EV/EBITDA and P/E multiples confirm this. One of the leading businesses that generate about 60% of the company’s operating profits, Amazon Web Services, could be bought out by Google or forced out of the market in the future. The dependence of online commerce volumes on the state of the global economy is another risk factor for the long-term investor.

  • Gap risk. Stock market trading sessions have gaps. Therefore, the risk of opening a new session with a price gap remains for short-term trading.

Amazon is one of the leaders in its segment, so the asset is attractive for long-term investment. Swing trading and trading by fundamental analysis are effective in the short term.

Amazon Stock Trading FAQs

Price chart of AMZN in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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