After an improvement of nearly70 percent from market share on March 23rd, this year’s stock is believed to rise at an all-time high current price of around 3200 dollars per share by Amazon AMZN stock. Although the Firm is expected to continue reporting solid growth in sales in the near future, and its high margin Amazon Web Services (AWS) business’ growing contribution already has a positive effect on the profit margin, we feel that the current P/E multiple figure of almost 140 x is far too high – making further stock price increases highly doubtful.
What Factors Drove 324.4% Shift in the Amazon Stock Between 2016 and Now? ‘Has the numbers behind it. From 23 March 2020, AMZN’s shareholdings rose from around $1,900 to $3,200 – more than the S&P 500, up some 41 percent during this period. Amazon’s stock price is continuing because millions of people around the United States and abroad have switched to online trading to satisfy their demands. Amazon has increased wages and added more than 100 K warehouse and retailer – and expects to do more to meet the huge unforeseen spike in demand. The company had 935 K staff at the end of April 2020. Compared with the previous year, the company reported a 26% increase in revenues at Q1 2020.
The fact that sales more than doubled in some situations justifies the surge in stock prices over the 2016-19 era. Amazons sales rose, largely led by contributions from North American retail income from $136 billion in 2016, to $281 billion in 2019. The growth of the net income margin from 1.7% in 2016 to 4.1% in 2019 led to the 137% increase in net income in the time in question.
In lieu of the standardising multiple of P / E from 150x in 2016 to 79x in 2019, stock prices rose during the time with margins and sales. However, the number of users this year has shot up again and during the coronavirus pandemic people are moving to online shopping and internet providers and the figure is at about 140x now.
Coronavirus Impact
In different cities worldwide, coronavirus has spread internationally, and manufacturing and economic operations have been affected. Consumption and consumer spending are expected to be negatively affected. In fact, the stock of AMZN stock has risen by around 58 percent as from 31 January, following a global health emergency from the World Health Organisation (WHO). The S&P 500 index, however, declined by around 2% over the same period. The organisation posted a 26 percent rise in total profits for Q1 2020, despite the coronavirus pandemic. Web offerings from Amazon have contributed to a 33% y-o – y sales rise, while retail revenues from North America have risen by 29% y-o – y. You get more information from https://www.webull.com/newslist/nasdaq-amzn.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.