Amazon Share: Should You Consider Investing in 2023
| 4 minutes read
The global reputation of Amazon is truly commendable and it has directly contributed to the growth of the company in the last decade. The revenues the company has been generating have been truly remarkable. But despite all that, the first quarter of Amazon’s performance in 2023 is not going to be the same as it has been previously. This puts many investors into a quandary about whether they should be investing in Amazon stocks or not. From the financial reports presented by different market analytics, it is evident that Amazon is going to perform terrifically well in the coming years. But for this to be believed, we have to look deeply into Amazon’s performance over the years, its upcoming projects, and why there is a downfall in Amazon’s share price.
Amazon Share Price at Present
As of 4th February 2022, the Amazon share price is sitting around 3,223 USD. If we trace the company’s performance in the last year, we can see that its valuation has decreased by 16.63%. But this was long expected and holds no room for surprise. Investors who have been keeping track of Amazon could have anticipated this dip right back in 2022 when the Amazon share price was at its historical best. When a company soars so high, it is generally expected that there will be some dip in the coming times. But in the case of Amazon, there have been evident factors that have led to the slowing down of the global brand in the share market. Let us take a look at them.
Factors That Affected Amazon Share Price
There have been several notable factors that hit Amazon in 2022 which have most likely led to the company’s slower rate of progression. They are as follows:
The Labor Wages in the US
The labor market was pretty tight in the United States in 2022. There were constant demands from the workers for a raise in wages. And with a company like Amazon, played a significant role. Amazon is a company that relies on its workforce a lot. With the rise in wages, it was expected that it would lead to the expenses of the company. This could be reflected in Amazon’s share price which started to dip consistently in the last quarter of 2022.
The company also provided sign-on bonuses to attract quality employees and to get them going during the tough time of the Covid pandemic.
The rise in labor wagers has affected the share market price of Amazon.
Tightened Supply Chain
The supply chain bottlenecks all across the globe caused logistical problems and thwarted the spontaneity of the company’s finance and services. This added up to the cost of raw materials and increased the overall cost of production.
But one of the biggest factors for the fall in Amazon’s share price has been inflation. It significantly increased the price of the goods and materials that the company relies on and this meant that Amazon would have to pay more for the same quality of goods and services.
The rise in inflation in 2022 has affected many global brands including Amazon.
But despite this dip in Amazon’s share price, should we expect the company to slow down in the coming years? The answer looks like a no. The simple reason for this is that the expenses Amazon is bearing up with are ultimately going to benefit the company in the long run. For instance, Amazon is committed to building a strong and dedicated workforce that would pay off on its own. And now that the Covid restrictions seem to be easing down for the good, it would revitalize the supply chain. With the economy getting back on track, inflation might also take a dip.
The Amazon Web Series
The revenue gain for Amazon Web Series (AWS) in the third quarter of 2022 was a staggering 39%. The operating margin was also over 30% in the same timeframe. What’s more, in the third quarter, AWS gave 13% of the total revenue but still managed to provide over 60% of Amazon’s operating income. The growing popularity of AWS is very likely to take this figure to an even better level in the coming years. Moreover, it is not just the e-commerce platform and AWS that Amazon is rooting its business in. Their upcoming plans might leave a positive impact on Amazon’s share price.
Amazon’s Future Projects
It is reported that Amazon is going to give tight competition to its rivals in broadband internet connectivity. According to a report, Amazon has a project code-named Project Kuiper that is to provide a system of low-orbit Earth satellites that is going to provide broadband services all across the planet.
In the department of digital advertising as well, Amazon might take up the competition with Google. The Amazon platform has all the potential to set up a digital advertising market and as per resources, it will not be long before they capitalize on this.
Should You Buy Amazon’s Stock?
With these developments in mind, the tide is likely to change in the favor of Amazon’s share price. The projects in their pipeline are gradually creating a buzz in the share market and investors are keeping keen on the latest developments. But what truly makes a reliable company invest is its grasp on the global market. Like Apple and Google, it is hard to imagine a future where a company like Amazon. The company has spread its branch in so many departments that even their failure in one particular area is not going to affect the corporation as a whole. This is the reason why Amazon’s share price has worked so consistently over the years and has seen significant growth.
Whether you should be investing in the company or not is a subjective decision. But if the market trend is to be witnessed, it is companies with strong foundations that are going to pay off in the long run. Of course, given how volatile the share market is, things can turn out to be the opposite of the trend. But more likely than not it is not going to happen.