What is Amazon
Amazon.com, Inc. is e-commerce, cloud computing, digital streaming, and artificial intelligence-focused American multinational technology firm. Along with Google (Alphabet), Apple, Meta (Facebook), and Microsoft, it is one of the Big Five corporations in the United States' information technology industry. The corporation has been dubbed "one of the most powerful economic and cultural forces in the world," as well as "the most valuable brand on the planet."
Amazon paid $13.4 billion to purchase Whole Foods Market in August 2017, significantly expanding its physical retail reach. Amazon Prime, the company's two-day delivery service, topped 100 million users globally in 2018.
Amazon is known for using technology innovation and enormous size to disrupt well-established businesses. By revenue and market capitalization, it is the world's largest online marketplace, AI assistant provider, live-streaming platform, and a cloud computing platform. Amazon is the world's most profitable Internet corporation. It is the country's second-largest private employer and one of the most valuable corporations in the world.
Amazon is a publicly traded company, making its stock available to anyone of legal age interested in purchasing shares.
What are Amazon Shares (Nasdaq: AMZN)
Amazon shares (AMZN) represent a unit of ownership in the Amazon Company. – and they are among the world’s most popular financial instruments. Amazon shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected earnings will make Amazon share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.
People trade Amazon shares because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Amazon shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.
Company growth is correlated with share price increases, which is what people are hoping for when they buy Amazon shares.
E-commerce giant Amazon reached an astounding market cap of $1 trillion in September 2018, becoming the second-ever publicly traded U.S. company to hit this mark, after Apple.
A $1,000 investment during Amazon’s IPO in May 1997, enough to buy 55 Amazon shares would be worth more than $2M, according to CNBC calculations. Next to the stock climb from $18 to almost $4.000, the huge return can be attributed to three stock splits, who turned one share bought in 1997 into twelve shares by the end of 1999.
That’s better than the so-called FAANG stocks, plus eBay – which debuted in that same period. Apple’s gain, which was the second-highest, is notable, but it also had a 17-year head start and its return is still less than half of Amazon’s.
Amazon stock is traded on the Nasdaq Stock Exchange under the AMZN ticker.
If all that makes you want in on Amazon’s eCommerce growth, here is everything you need to know to buy Amazon stock & shares to invest in AMZN.
How to Buy Amazon Shares
Learning how to buy shares may not sound complicated, but you will need to do some research — and learn the basics — before making your first investment.
- Learn the difference between investing and trading
- Review Amazon’s performance and outlook 2022
- Understand the risks and charges
- Access the trading platform and place your orders
- Stay up to date with the latest news and rumors about Amazon
1. Learn the difference between investing and trading
People have two options to buy shares of stock online. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can buy Amazon stock on the NASDAQ exchange, so you own a share in the company (investor). Alternatively, they can buy Amazon shares without owning them, speculating on the price of the underlying asset (trader).
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are significant differences for you to be aware of.
Investing in Amazon Stock (Nasdaq: AMZN)
Investors buy Amazon shares hoping their price will rise and they can sell them later for a profit, adhering to the basic principle of buying low and selling high. Investors will take positions over a longer period, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial price tag. That said, investors should be aware they might get back fewer returns than they initially invested.
Investors will buy Amazon shares to:
- Make a profit from the Amazon share price rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires investors to hold onto their shares for an extended period. That’s why you’ll sometimes hear the phrase ”time in the markets is better than timing the markets” when talking about share investments.
>> Learn how to invest in stocks for beginners
Amazon (or any single stock, for that matter) can be a very volatile investment. You can lower the risk by diversifying your investment holdings.
An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund provides a broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
AMZN currently makes up about 3.9% of the S&P 500, meaning 3.99% of each dollar you invest in an S&P 500 index fund goes to Amazon. If you want an index with an even larger AMZN representation, you might consider investing in a Nasdaq index fund, where Amazon accounts for almost 7% of holdings.
Consumer Discretionary exchange-traded funds (ETFs) provide exposure to the performance of companies within the eCommerce industry.
AMZN makes up 22.74% of VCR (Vanguard Consumer Discretionary ETF), 22.47% of ONLN (ProShares Online Retail ETF ), 21.94% of XLY (Consumer Discretionary Select Sector SPDR ), 21.91% of FDIS (Fidelity MSCI Consumer Discretionary Index ETF), 21.6% of CLIX (ProShares Long Online/Short Stores ETF).
>> Learn what ETFs are and how do they work
Trading Amazon CFDs
On the other hand, traders might seek to capitalize on short-term share price gains. Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.
Trading Amazon stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Amazon shares without taking direct ownership.
Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.
For example, a trader who wanted to buy 10 Amazon CFDs at $3000 per share would only require $6000 of trading capital, thereby leaving the remaining $24000 available for additional trades.
But keep in mind that leverage can increase both your profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.
With CFDs, you can ‘buy’ (go long) the shares if you think the Amazon stock’s price will rise, or you can ‘sell’ (go short) if you think the Amazon stock’s price will fall.
>> Learn what is CFD trading and how it works
Going Long Amazon CFD
Amazon has a sell price of $3250 and a buy price of $3254.
Amazon's next earnings announcement is fast approaching, and you expect it to be good news. You think the company's share price will go up, so you buy 10 Amazon CFDs at $3254. This is the equivalent of buying 10 Amazon shares.
Because you can use leverage in CFD trading, you do not need to put up the full value of Amazon shares. Instead, you only need to cover the margin, which is calculated by multiplying your exposure with the margin factor for the market you are trading.
So, if Amazon has a margin factor of 20%, your margin would be 20% of the total exposure of your trade (10 share CFDs x $3254 = $32540), which is $6508.
If your prediction is correct:
When Amazon announces its results, it is clear the company had a successful quarter – and as you had predicted, its share price climbs. You decide to close your position when it reaches $3400, with a buy price of $3404 and a sell price of $3400.
You reverse your trade to close a position, so you sell your 10 CFDs for $3400.
To calculate your profit, you multiply the difference between the closing price and the opening price of your position by its size. $3400 – $3254 = $146, which you multiply by 10 CFDs to get a profit of $1460.
If your prediction is wrong:
Amazon's results are worse than expected, and its share price immediately falls. You decide to cut your losses and sell your 10 CFDs at $3200.
Your position has moved $54 against you, meaning you suffer a loss of $540.
Going Short Amazon CFD
Shorting with derivatives can be an effective way to protect your investments against downward price movements in your non-leveraged investment portfolio. Also, it can be a way to generate profits outright from shares that are falling in value. But when you go short, your potential losses are theoretically uncapped because there is no limit on how high a company’s share price can rise.
Here is an example:
Suppose Amazon shares are currently trading with a sell price of $3250, and you think the price will go down. So, you decide to open a short CFD position on 20 Amazon shares CFD. A week later, the buy price reaches $3180, and you close your position. This means you made $1200 in profit ([3250 - 3180] x 20 = $1400), excluding additional costs.
If the price rises, you register a loss. For example, if Amazon shares rose to a price of $3300, you would suffer a $1000 loss instead, excluding additional costs.
Most short-selling takes place on shares, but you can short-sell many other financial markets, including forex, cryptocurrencies, bonds, ETFs, commodities, and indices.
You can practice your trades on a demo account or open a live trading account if you are ready to take on the markets.
When you create a trading account with CAPEX, you will be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) Amazon and other 2,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index, or sector that could be rising or falling in price.
- Trade a host of global indices to go long or short on the performance of an entire economy with a single trade.
- Use QuantX, the smart portfolio builder that helps you cover the popular industries and only invest in the top-performing stocks.
2. Review Amazon’s Performance and Outlook 2022
Before buying Amazon stock—or any stock (see our guide on how to buy shares)—it’s wise to do some research into the company’s financials, performance, and outlook. The easiest place to get started is through a company’s annual reports and quarterly reports. Public companies like AMZN are required to publicize detailed information about their financial health.
You can find these on Amazon’s investor relations site or by searching the Securities and Exchange Commission’s (SEC) database.
You may also turn to experts for their input. Brokerage companies frequently release commentary on major stocks and industries, and third-party evaluators like Trading Central provide comprehensive technical and fundamental analysis.
When you combine financial data with expert insight, you will be able to decide how much of your money you want to put into Amazon stock.
Amazon Shares Forecast 2022 - Fundamentals
Before you load up the trunk with Amazon shares, pop opens the hood and see what you are really getting into. Remember, when you buy Amazon stock, you are purchasing a small portion of an actual business:
Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally.
Amazon's balance sheet, income statement, competition, and management (all explained in our guide on how to research stocks) will help you give the company a good once-over.
You can access research, analyst ratings, and other key information about Amazon via your brokerage account or a financial information website. If you like what you see, your next step is to consider whether Amazon fits into your current investment portfolio.
- Amazon's market capitalization is $1.9 T
- Amazon's upward move is 18.6% in 1 year
- Earnings per share (EPS) were up 46.8% per year over the last 5 years, and are forecast to grow by 31.72% per year.
The company reported a strong third-quarter result with improved earnings, revenues, and profit margins.
- Revenue: US$110.8b (up 15% from 3Q 2020).
- Net income: US$3.16b (down 50% from 3Q 2020).
- Profit margin: 2.8% (down from 6.6% in 3Q 2020). The decrease in margin was driven by higher expenses.
The price-to-earnings ratio (PER) is 71. Analysts set up a stock fair value of around $5520.62, which means Amazon's shares price is 33.4% undervalued according to valuation.
*Last update: November 2021. Source: Yahoo Finance
Amazon (NASDAQ: AMZN) does not pay a dividend. (source: WallStreeZen)
Amazon Shares Forecast 2022 - Technical
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the technical indicators that a trader chooses to utilize.
To trade using the Amazon price chart, you can use the tools available on a wide variety of trading platforms, such as our web-trading platform and mobile apps, Web Trader and MetaTrader 5.
Our web-trading platform, for example, offers 6 chart types (including the famous Japanese candlestick chart) to help you analyze price performance across different timeframes. It also enables you to deal in an instant – directly from the charts. You will be able to open, close and edit positions in just a couple of clicks.
Trading charts always feature distinct patterns that technical analysts can use to interpret the behavior of buyers and sellers. These chart patterns can give traders an indication of where the market could go next. As you will notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trends: uptrends, downtrends, and sideways trends.
Technically, AMZN shows a bullish channel since July 2020. A long-term narrow consolidation indicates the odds are favoring the major trend to resume.
The all-time high Amazon stock closing price was 3731.41 on July 08, 2021, and was re-tested 4 months later.
A 2022 Amazon shares forecast should follow the 52-week moving average as the dynamic trendline and the lowest price that keeps the trend in a strong position. "Buy the dip" investors will seek a failed breakdown of a key support area to enter the primary trend or to add to their positions.
The 2022 Amazon shares price targets are 138% to 161.8% Fibonacci extension of the previous leg up since there are no other resistance levels from the past.
Buy Amazon shares or not?
It is recommended to watch for stocks at the major long-term support area. We want to buy Amazon shares at relatively cheap prices (compared to historical values), not expensive prices. Also, have an exit plan for how you will exit a profitable trade. Define how and why you will exit. Since we used to support to get into the trade, you may consider exiting just below a long-term resistance level.
If buying at support, and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1 or even 3:1. That means that if you buy Amazon shares at $55, you should be reasonably able to get out of the stock at $50 or higher. In an absolute worst case you lose $50 a share (but since we don’t hold losers forever, this is highly unlikely), but based on the historical chart it is quite feasible to go up to $100/share or more. This is known as the risk/reward ratio, a key indicator when deciding to buy Amazon shares or not.
With CAPEX WebTrader, you can perform an in-depth analysis of the charts with 90 indicators (including moving average, MACD, RSI, and Bollinger Bands). The platform also supports an interactive trading activity with high-end research tools helping you interpret market data.
3. Understand the risks and charges
Trading can be seen as riskier than investing due to leverage. But investing also carries a risk – and there is no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We have courses at CAPEX Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
>> Learn more at CAPEX Academy
Our costs and charges for trading vary depending on the product that you use to take a position.
Amazon (AMZN) CFD Trading Conditions
|SPREAD PER UNIT||0.20 pips||LEVERAGE||1:5|
|OVERNIGHT ROLLOVER - LONG||-0.0076 %||OVERNIGHT ROLLOVER - SHORT||-0.0063 %|
|INITIAL MARGIN||20.0000 %||MAINTENANCE MARGIN||10.0000 %|
- Spread represents the difference between ASK price and BID price.
- Future Rollover adjustment consists of the difference in price between expiring contract and new contract as well as the spread of the CFD.
- Swap is the amount credited to or debited from an account where positions are held overnight.
- Inactivity fee represents the monthly amount deducted if no activity is recorded for 12 months in an account.
For further information, please refer to our Frequently Asked Questions and Charge and Fees.
4. Access the trading platform and place your orders
To buy Amazon shares CFD with CAPEX Webtrader is very easy and intuitive. Opening an online trading account is as easy as setting up a bank account. Here are the steps:
Open an account or log in
First, create an account or log in on capex.com. To open an account click the "Register" button and complete your details.
Once the platform is accessed, the registration process must be completed in order to operate with real money. Click "Complete the Registration and Start Trading".
To log in, from the CAPEX website, click on "Login".
Deposit funds into your account
To trade with a live account it is necessary to deposit funds. This is done from the platform itself by clicking on the "Add funds" button:
Also, it is possible to trade on a risk-free demo account with a balance of € 50,000, which is ideal for getting to know the platform and testing trading strategies.
CAPEX offers you different payment methods: debit cards, credit cards, bank transfer, skrill, and more.
It is noteworthy that CAPEX does not charge any fees or commissions for depositing funds.
Look for Amazon shares
To view Amazon shares (AMZN) real-time price and chart on the trading platform can click on the "Search" icon located in the left panel or by clicking on "Shares" and then select the instrument, in this case, Amazon.
Use the indicators and drawings to analyze the chart
Click the indicators icon and select your favorite ones. There are trend-following, oscillators, volatility, and support/resistance indicators available. To learn how many indicators to use and how to combine then visit the Technical Indicators section in CAPEX Academy.
Set up the order to buy Amazon shares
To buy Amazon shares CFD, click on the "Buy" button and a window is displayed to configure the purchase order:
The number of Amazon shares to be purchased must be entered and it is allowed to set up a Stop Loss to limit the potential loss, and/or a Take Profit to close a profitable position once the Amazon stock reaches a specific price. These orders can be configured based on price, pips, cash value or percentage.
To proceed with the purchase, click on "Place Order".
However, AMZN trading does not end here. You will want to check out the next step to make sure you are investing your money as well as you can.
Why Trade Amazon with CAPEX?
- Advanced AI technology at its core: Whether they prefer the web-based and mobile-ready WebTrader or favor the highly popular MetaTrader 5, we make sure investors make effective use of fast and reliable trade execution speeds, complex order and risk management tools, advanced charting options, powerful research tools in collaboration with highly-regarded platforms such as Trading Central or TipRanks.
- Trading on margin: Providing trading on margin (up to 5:1 for individual equities), CAPEX gives you access to the stock market with the help of CFDs.
- Trading the difference: When trading Amazon CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Amazon stock price. Online trading with CFDs is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop loss, take profit, and apply trading scenarios aligned with their objectives.
- All-round trading analysis: The browser-based platform allows traders to shape their market analysis and forecasts with sleek technical indicators. CAPEX provides live market updates and various chart formats, available on desktop, iOS, and Android.
- Focus on safety: CAPEX puts a special emphasis on safety:
- sc.capex.com is a website operated by KW Investments Limited, which is authorized and regulated by the Seychelles Financial Services Authority, license number SD020.
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- Global partnerships: CAPEX is proud to be the Official Sponsor of Juventus, one of the most prestigious football clubs in the world, a football club that has a special place in the hearts of the people of Italy, with a strong legacy and a dedicated community.
5. Stay up to date with the latest news and rumors about Amazon
Get the latest Amazon (Nasdaq: AMZN) stock news and headlines to help you in your trading and investing decisions.
History of Amazon
1994: Choosing a name
Jeff Bezos chose the name "Amazon" after consulting a dictionary; he chose it because it was "strange and distinctive," just as he had envisioned for his Internet venture. He pointed out that the Amazon River was the world's largest river, and he meant to make his bookstore the world's largest bookstore.
1997: Getting the public involved
At $1.96 per share (adjusted from $18 following further stock splits), Amazon went public with a $300 million capitalization. If you had put $1,000 into Amazon shares when they went public in 1997, they would have been worth over $1,137,000 by the end of 2019.
With Amazon's rapid rise to prominence, the business was swiftly targeted by some of its larger competitors, with lawsuits filed against it by Barnes & Noble and Walmart shortly after becoming public.
1999: Amazon allows third-party sellers
When Amazon started allowing third-party retailers to sell products on the site, it entered a whole new market. Originally, this was touted as a way to help shoppers locate rare and uncommon products and specialty items, but as we all know, it quickly evolved into much more. Over 250,000 buyers purchased anything from a third-party seller on Amazon in the first four months.
2005: “Priming” the ingenious loyalty program
During an earnings call in 2005, Jeff Bezos announced a customer loyalty program that offered free two-day shipping on any order, along with other perks and benefits for only $79 per year. Prime has proved to be a massive success: it now has more than 112 million members across the globe.
With the beginning of Amazon Prime came the great rise of customer appreciation and loyalty towards the company. Even from the early days of Amazon, Bezos set his sights on customer obsession and ultimate customer satisfaction, and Prime cemented that idea into reality. Simply put, the convenience and accessibility to goods that Prime offers – not to mention other benefits, including TV and music – is the ultimate expression of Amazon’s quest to deliver absolute satisfaction to its customers.
In 2019 the average Amazon Prime member in the U.S. spent $1,400 on Amazon.
2015: Raising the bar
Amazon has been working on the Echo (and its Alexa features) since 2011, and the devices were ultimately released in June 2015. Many people were intrigued by the concept of an in-home virtual assistant, but few expected how popular it would become in such a short period of time.
The Echo Dot is the most popular Alexa-enabled gadget, but Amazon has recently begun to integrate Alexa with a variety of smart home devices and to update Alexa's functions on a regular basis. Amazon has sold over 100 million Alexa-enabled devices and expects sales to continue to rise fast.
2020: Navigating Covid-19
No company has been spared the effects of the Coronavirus pandemic around the world, but few have been as prominent as Amazon. With Bezos resuming his role as CEO, Amazon has been chastised for failing to protect workers, for being at the forefront of a huge consumer shift to eCommerce, and, depending on who you ask, for either losing or profiting significantly from worldwide lockdown. Regardless of how you look at it, Covid-19 and its ramifications appear to have the potential to change Amazon more than any other event in its history.
*Last Update: November 2021. Sources: Britannica, Wikipedia