Amazon Stock on a High as the Grip on Customers’ Wallets Tightens
Amazon.com, Inc. (NASDAQ:AMZN) had a blockbuster week with Jeff Bezos becoming the second richest person in the world and Amazon stock posting new highs with a record closing of $891.51 Monday. AMZN stock investors must be over the moon to see the shares posting all-time highs again and again. Amazon.com, Inc. is no longer pulling rabbits out of its magic hat, but is constantly coming up with new tricks!
There has been a spate of announcements since last week and here are the three most important ones that Amazon stock investors should take note of. As always, the new moves by Amazon.com, Inc. point towards immense growth potential in the future, but a few of them would also require heavy capital outlay. So the question of company profitability would always remain. However, as an investor in Amazon, you know that Jeff Bezos has never been concerned about profits so much as he has been obsessed with market share. So AMZN stock investors may just sit back and enjoy the company’s upward march in global markets before high profits start showing up.
Acquisition of E-Commerce Leader Souq.com
Last Tuesday, the online retail giant announced that it had reached an agreement to acquire Souq.com, which is an e-commerce leader in the Middle East. The Middle East retail giant Souq.com would grow further with Amazon and bring more products and services to customers. Russ Grandinetti, Senior Vice President, International Consumer at Amazon, said, “Amazon and SOUQ.com share the same DNA.” (Source: “Amazon to Acquire SOUQ.com,” Amazon.com, Inc., March 28, 2017.)
Dubai-based Souq.com is the largest online retail platform in the Arab world, featuring more than 8.4 million products across 31 categories. The e-commerce site gets over 45 million visits per month and has localized operations in the KSA, UAE, and Egypt.
Souq.com would be the entry point for Amazon.com, Inc. in the Middle East, which has a very low level of online retail spend penetration. However, Amazon’s bet proves that the region is likely to witness strong growth in the coming years and the online retail giant shall be well-prepared when that happens.
Amazon is already heavily invested in emerging markets like India, and its strategy of expanding its global footprint bodes well for AMZN stock. The online retailer can not only boost its e-commerce business, but can also promote its other services once it gains a foothold in these markets. “Amazon Web Services” already has offices in the Middle East and could open more in the coming days.
Introduction of Amazon Connect
Last Tuesday, Amazon Web Services announced a self-service, cloud-based contact center service called “Amazon Connect.” The new service makes it easy for any business to deliver better customer service at a much lower cost. (Source: “AWS Announces Amazon Connect,” Amazon.com, Inc., March 28, 2017.)
Companies can set up a cloud-based contact center with Amazon Connect in just a few clicks. There are no up-front payments, no long-term commitments, and no infrastructure to manage with Amazon Connect.
By adding another simple and relatively inexpensive feature for its customers, Amazon Web Services scores further brownie points for its cloud platform. Amazon Connect is currently available in the U.S. and 18 European countries, with plans of expanding to more countries.
Not only this, but AWS today announced the opening of Data Centers in Sweden next year. The company has been increasing its investments in the Nordics as the number of customers keeps on increasing. A few of the well-known Nordic startups like Tidal and Vivino have built their business on top of AWS. (Source: “Amazon Web Services Announces the Opening of Data Centers in Sweden in 2018,” Amazon.com, Inc., April 4, 2017.)
It is no secret that Amazon Web Services is the leader in cloud business, much ahead of its rivals “Microsoft Azure” by Microsoft Corporation (NASDAQ:MSFT) and “Google Cloud” by Google-parent Alphabet Inc (NASDAQ:GOOG,GOOGL), which are trying hard to catch up to AWS. And the way Amazon is strengthening its position, there will be no slowing down for Amazon stock in the future.
Amazon Launches Amazon Cash Service
The e-commerce behemoth has launched “Amazon Cash”—a new service which would let users add cash to their Amazon Balance at a number of participating convenience, grocery, and drug stores by purchasing an Amazon.com Gift Card to the user account. (Source: “Amazon Cash,” Amazon.com, Inc., April 3, 2017.)
With Amazon Cash, users will not need any bank card and will be able to add cash to their Amazon Balance by showing a barcode at any participating store. Amazon Cash service would help target the demographic that does not have a bank card but could be a potential Amazon buyer. This makes shopping very convenient for users and benefits the business and AMZN stock in the long term.
The Bottom Line on Amazon Stock
Amazon.com, Inc. will keep acquiring new companies for future growth; will keep making its Cloud service better and stronger; and will keep introducing new features for online shoppers to make them stick to its ecosystem. This should dispel all doubts related to its future growth.
AMZN stock has now posted almost 19% returns in the year to date as compared to the broader S&P 500 Index that gained just over five percent in the same time period. There have been reports of the stock reaching over $1,000, and with the way the business is going, it is only a question of when. Amazon stock is likely to make many more new highs as it conquers new markets around the world.