Soros Is Plowing Millions into AMZN Stock
E-commerce behemoth Amazon.com, Inc. (NASDAQ:AMZN) is one of the few S&P 500 constituents that have done well so far this year. AMZN stock has more than doubled in its year-to-date run and is now being cited by many to be trading in the overheated territory. However, billionaire hedge fund veteran George Soros views it differently. Under his microscope, Amazon stock still appears undervalued.
Amazon stock made fresh highs earlier this month, while bears continued to scream “sell.” If we look back to the 90s, when this company was founded, and compare how far Amazon has come since then, the company has clearly lived up to its name; it truly is the biggest of its kind today, and Soros sees that.
George Soros’ hedge fund, Soros Fund Management LLC, has upped its stake in AMZN stock in the latest quarter to 77,877 shares. At Tuesday’s intraday price, this means Soros Fund Management has more than a $50.0-million interest in the stock. (Source: “Soros Fund Management 13F Filing,” Securities and Exchange Commission, November 16, 2015.)
There’s obviously a time lag between when the transactions actually took place and when they were reported in the fund’s 13F filings, but it’s clear that Soros has already made some solid profits on the trade. Here’s one reason why Amazon could be becoming eye-candy for the “hedgies.”
Here’s How Amazon Plans to Dominate Retail
Let’s consider an example; if you had the choice to go to your nearest store and buy your desired product immediately versus waiting two days to receive it in the mail, which option would you pick? Naturally, most of you would pick the former over the latter, which is why the brick-and-mortar model thrives. Now imagine that you were ordering the product on and could receive it within a few hours at your doorstep, without ever leaving the comfort of your warm living room. Would you now take that option over buying in-store? I would.
This is what Amazon has planned out. The company’s same-day delivery service now spans across 24+ metro areas across the U.S. and its “Prime Now” service, which offers deliveries within an hour’s time, is quickly gaining in popularity. At the same time, the company is working on its drone delivery service, “Prime Air,” which is expected to start delivering packages via drones as early as 2019. Sounds unreal, right? But hasn’t Amazon always made the seemingly impossible possible?
The online retail sector is expected to post a year-over-year growth of 11% by the end of 2015. (Source: “Amazon’s Holiday Shopping Target: The Procrastinator,” Bloomberg, Nov 17, 2015.) The growing consumer interest in this sector can be gauged from the fact that today, our country literally has a holiday reserved only for online shopping (Cyber Monday, that is).
From Cyber Monday in the U.S. to Singles’ Day in China, there’s no questioning that online retail is on the rise and Amazon is gearing up to dominate this space in the local online industry (as if it doesn’t already) by offering the fastest delivery services.
The Bottom Line on AMZN Stock
Amazon’s characteristic model, which focuses more on the top line rather than bottom-line growth, is what sets this company apart from others in the retail space. Bezos’ broader focus, on customer service as opposed to higher margins, is what has kept AMZN stock afloat through the last two recessions. With some promising projects under its hood, Amazon is on track to continue posting strong growth in the coming years.
In a nutshell, one would be a fool to bet against AMZN stock.