We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely.
Warren Buffett (Source)
Jeff Bezos' garage-born bookshop Amazon.com (AMZN) expanded into the world's largest online retailer, with its own web services and advertising divisions. Over 200 million people throughout the globe are Prime members. The company is still very popular and liked — it made almost £100B in Q1, 2022.
No wonder Amazon's stock price has risen by approximately 125% during the last five years. And that's during the major stock market collapse of 2022… In fact, if you remove that recession, AMZN stock gained more than 250% in the five years that led up to the company's all-time November high a year before.
If those sparkling figures have you considering joining the Amazon bandwagon, read on. Here’s your guide to why and how to buy Amazon shares in 2024.
Reasons to Buy Amazon Stock
- In September 2018, Amazon's market capitalization reached £800B.
- The organisation has gone a long way from its humble beginnings at Barnes & Noble conference rooms.
- Amazon's history is full of interesting anecdotes, such as when the company first dabbled in the auction site business and when it first introduced a search engine.
- On the other hand, numerous interesting little-known details regarding Amazon's present endeavours, such as its cashier-free shops and drone deliveries, exist. The company is highly diverse.
Performance update
Amazon's (AMZN 2.17%) stock is down 50% from January 2023 to date due to the general sell-off in the stock market in 2022. Investors have been leery about industries dependent on consumer spending, such as e-commerce, due to the persistently high inflation over the last year.
However, Amazon's e-commerce company has grown over the last year amid widespread economic uncertainty. Amazon's cloud computing service is thriving, and the company's advertising business is always expanding, so expectations for the next year are high.
★ Amazon Business’ Pay by Invoice — Review
Amazon rings in the new year with optimism for expansion in three profitable business sectors. Many people will purchase Amazon stock in 2024 for these 3 reasons.
- Industry control
- e-Commerce leadership
- Growth in digital adverts
Let’s explore
1. ✔️ For starters, Amazon controls a £310 billion industry.
The first reason to buy Amazon shares is that Amazon Web Services (AWS), the company's cloud computing division, is rapidly expanding and represents a promising investment opportunity (AWS).
The platform has a 34% share of the market, while the industry as a whole is valued at £310 billion with a CAGR of 15.7% predicted between now and 2030. This means that AWS stands to earn substantially from the developing market for some time to come.
Amazon's investment in cloud computing, though, is already bearing fruit. AWS more than held its own as the company's only source of operational revenue in the third quarter of 2022. The cloud computing market was responsible for £17 billion in sales, up 27% year-over-year, and $5.4 billion in operating profits.
Amazon has weathered a difficult economic year thanks to cloud computing, and this trend is certain to continue. According to the company's quarterly report, AWS has £86 billion in unpaid income from long-term contracts that would end in the next 3.8 years.
With over £83 billion in guaranteed revenue ahead of it, AWS is a great incentive to purchase Amazon stock since it is on a solid growth trajectory.
2. ✔️ Amazon has the lion's share of the online retail market
Pandemic lockdowns across 2021 drove customers inside, where they rushed to Amazon for basics.
Don’t be tricked….
The second reason to buy Amazon shares is that it is still a titan in online retail. Investors have been frustrated by Amazon's e-commerce division over the last year because of misleading sales comparisons to 2021, which have impacted earnings results.
Pandemic lockdowns across 2021 drove customers inside, where they rushed to Amazon for basics, driving the online retailer to record sales. Despite the economy's downturn in 2022, even modest growth has been noteworthy.
Revenue from Amazon's digital marketplaces increased by 7% year over year to £44 billion in the third quarter of 2022, without excluding the impact of currency changes. Meanwhile, its sales from third-party sellers rose 18% to £24 billion as more vendors joined the Amazon marketplace.
In addition, Amazon's Prime membership, which brought in £8 billion in sales last quarter, is the most promising element of the company's e-commerce operation. The subscription model boosts profits and encourages customers to spend with Amazon by providing perks like free two-day delivery.
374 million people visit Amazon UK (Source: Statista). More than 157 million people in the United States became Prime members on Amazon or nearly a whopping 59.8 per cent of the total population. EMarketer predicts that by 2025, 168.3 million people will be members, representing 62.4% of the total U.S. population.
While economic difficulties in 2022 may have threatened online business, they would likely not have lasted. In reality, according to data from the Federal Reserve, consumer spending has increased over the last three quarters. If this tendency keeps up, Amazon shareholders may be happy.
3. ✔️ Ever-expanding online ads activities
The third reason to buy Amazon shares It may seem like Amazon doesn't have a chance in the digital advertising sector with giants like Alphabet and Meta. The firm, however, has come a long way in the previous several years. Amazon's share in the digital advertising market grew from 7.8% in 2019 to 13.3% in 2022 and is projected to reach 14.6% in 2023.
Comparatively, Alphabet's market share will be 34.9 per cent in 2022, down from 37 per cent in 2019.
At a compound annual growth rate (CAGR) of 13.9%, GlobeNewswire predicts that the worldwide digital advertising industry will expand to £656 billion by 2026. Amazon's advertising services revenue in Q3 2022 increased 25% year over year to $9.5 billion, demonstrating the company's success in capitalising on the industry's expansion.
Unfortunately, the last year has not been kind to Amazon. A recession, though, won't persist forever. In spite of market volatility, the firm has expanded its presence in profitable sectors in 2022, making it an interesting purchase for the long term.
How to Buy AMZN Shares — 1. Open Trading Account
You will need a web-based brokerage account in order to purchase Amazon stock. Check out our recommended brokerages and investing apps to get you started if you don't already have one. Keep an eye out for costs and account minimums, although these days most brokerages provide commission-free stock trading.
When deciding on an investment account, it's also important to consider your long-term financial objectives.
Consider an ISA if retirement savings are a priority of yours. In return for restrictions on when and how the money may be used, you can avoid paying capital gains taxes. Withdrawals made at inopportune times or for reasons other than their intended purpose may be subject to additional fees or taxes.
An easily accessible taxable investment account is ideal if you're putting money down for a more general purpose like creating wealth or a property down payment.
How to Buy AMZN Shares — 2. Set Financial Plan
Smart people are the ones who ask the most thoughtful questions, as opposed to thinking they have all the answers.
Ray Dalio, Principles (Source)
Here’s where the hard part is: having a sensible plan based on reality.
Even with his vast wealth, Bezos cannot keep investing in AMZN indefinitely. Answering these questions will help you decide how much money to put into Amazon.
- Just how much money do you have to spend? Before you start investing in Amazon, be sure you've got all of your bases covered. You should be able to save for retirement, pay your expenses, and start an emergency fund. After they are paid for, you may use the money toward investment opportunities like Amazon shares.
- What is the price of AMZN? Amazon stock is now a far more affordable investment option than it was in the past. Prior to the latest stock split, one share of Amazon was worth close to £2,300. After the 20-for-1 split, each share is now worth around £105. Which could make it something to add to your diverse basket of gold investments and so on.
- How do you intend to put your money to use? People often invest in one of two ways: either with a single large payment or with many smaller ones spread out over time. This second strategy, known as dollar cost averaging, may help you spread out your share purchases over a longer period of time in the hopes of paying less per share overall. Instead of making you wait until you've accumulated a certain quantity, it immediately puts your money to work for you in the stock market, where it may continue to grow.
The ideal investor [Amazon investor] is someone who is ready to think long-term, comparable to the company's management philosophy.
- Where do your other savings and assets sit? AMZN probably won't be your sole stock holding for your extra savings. In light of this, you should think about how it relates to your other investments and future goals. Tom Forte, managing director and senior research analyst at D.A. Davidson and Company, states, “The ideal investor [Amazon investor] is someone who is ready to think long-term, comparable to the company's management philosophy.” Someone who has faith that the company will continue to discover lucrative new avenues of expansion in order to sustain its high value and steady increase in revenues over time.
How to Buy AMZN Shares — 3. Research
Do your homework to make sure you're happy with Amazon's direction and performance before you invest in the company's shares. Because it is on the stock market, Amazon must report its financials to the SEC (SEC). You may access Amazon's annual (10-K) and quarterly (10-Q) filings by searching for the company on SEC.gov or visiting the company's investor relations website.
You may further evaluate Apple as an investment opportunity by consulting analyst opinions found on sites like Fidelity, Morningstar, and Forbes in addition to the aforementioned information.
How to Buy AMZN Shares — 4. Purchase
In order to purchase Amazon stock, you need to now use your online brokerage account or trading app. To invest in Amazon stock, just enter the company's ticker symbol (“AMZN”) and the desired number of shares or dollar amount.
If applicable, you may also be asked to specify the nature of the order you're placing. Market orders and limit orders are two of the most typical variations.
- Putting in a market order means you want to purchase or sell shares of stock at the going market price.
- In the case of a limit order, the purchase or sale of shares will occur only if the stock price reaches the specified level.
Amazon, like many other tech firms, is traded on the Nasdaq during the regular trading hours of 9:30 a.m. to 4:00 p.m. ET, Monday through Friday. If you have a good relationship with your broker, you may be able to trade before and after market hours.
How to Buy AMZN Shares — 5. Rebalance
Whether you have a few stocks or a few hundred, it's important to check in on your portfolio at least once a month, and ideally reevaluate quarterly or yearly. If you do this often, you can monitor your account's performance and make modifications as necessary.
You can evaluate the success of your Amazon stock by comparing it with the returns on other popular markets. If you want to see how Amazon manages its money over time, you may look at the information it publicly discloses.
Also, if an investor's investment strategy or risk tolerance has changed, rebalancing may be used to realign the portfolio's weightings across its various securities and asset classes to reflect the investor's revised asset allocation.
The optimal rebalancing frequency for a portfolio is determined by a number of factors, including transaction costs, personal preferences, and tax considerations such as the type of account from which sales are being made and whether or not capital gains and losses will be taxed at a short-term or long-term rate.
It also varies with age. If you are still young, in your twenties and thirties, you may not need to rebalance your portfolio as often as someone who is getting close to retirement and wants to optimise their returns. About once a year is fine, but longer intervals may be suitable if certain of your portfolio's assets haven't seen a significant increase in the last year.
In addition, if an investor's personal circumstances change, it may be necessary to reevaluate their asset portfolio. The following are some principles for rebalancing your portfolio, which you may use as a starting point regardless of your own preferences.
- Keep notes: If you have recently settled on a great asset-allocation plan and bought securities across all asset classes in accordance with that strategy, be sure to keep track of the overall cost of each security (e.g. AMZN shares) and the total cost of your portfolio. You may use the stats to look back at your portfolio's performance over time and see how it stacks up against the market.
- Compare: Take a look at the value of your portfolio and each asset type at a future date. By dividing the current value of each asset class by the entire current value of the portfolio, you may determine the relative importance of each fund in your portfolio. Check this sum against the initial calculations. Is there anything major that has changed? If you don't know what you're doing and don't need the money from your portfolio soon, sitting on it can be the best option.
- Change: If you believe that rebalancing your portfolio's asset allocation has altered its risk profile, multiply the current value of your portfolio by the (%) weightings you initially gave to each asset class. Your calculations will be the amounts to put into each asset class to keep your asset allocation the same.
Methods for Selling Amazon Shares
There will come a point when you’re ready to liquidate your AMZN stock, or a portion of it, whether it's to fund a significant purchase or diversify your investment portfolio. To sell a stock, go to your broker's site or investing app and input the ticker symbol along with the quantity you want to sell.
An appointment with a tax expert, such as a certified public accountant (CPA), is recommended if you have significant earnings to discuss tax planning options.
Selling Stocks in Three Easy Steps
1. Stocks: Knowing When to Sell
Your investment plan, your time horizon, and your comfort level with risk should all factor into your decision about whether to sell.
However, emotions like dread and aversion to loss might be obstacles. The decision to sell stocks might be made for good or poor reasons. If you're about to pull the trigger, be sure your emotions are in check.
Reasons might include continued underperformance as compared to the competition, reckless leadership, or management actions you disagree with. You may have concluded that your money would be better served elsewhere, or you may be taking profits in order to offset future taxable gains.
Poor motivations usually comprise an impulsive response to temporary changes in the stock market or isolated events involving the firm. When things become rough, the last thing you want to do is make things much more difficult for yourself by bailing out.
(As the adage goes, “Buy cheap, sell high.”) If you're considering selling your stock, it's important to remember why you purchased it. Did you think about what kind of news or events may convince you to sell? Review your thinking to make sure you are not reacting impulsively.
2. Method: Choosing Purchase Type
You may place the same kinds of orders when selling shares of stock as when purchasing them. To keep your stock acquisition expenses down, you need to employ the ideal order types. As the seller, your primary concern should be limiting losses while increasing potential gains.
Market Orders
In a matter of seconds, your order will be completed at the current market price. The stock price might go up or down between the time you make the purchase and the time it is fulfilled, so the final price you get may be somewhat higher or lower than what you saw at the time of selling.
The danger is that there are no limits on the selling price of your shares, for instance, if there is a massive crash during the trade execution period.
Limiting Orders
One prevention to the above is to restrict the order to only be filled if the stock price reaches or exceeds the limit price you choose. For instance, a £31 limit order will be filled only if and when the stock price reaches or exceeds that level in trading. The danger: You can miss out on selling if the stock never reaches your target price.
Orders by Stop-Losses
If the stock you're trading drops to a stop price you've specified, your order will be completed. In the event that the stock price drops to your stop price (for instance, £28 or less for a share that is £30 at present), your order will be filled as a market order.
You run the danger of having to sell at prices lower than your stop loss, with no floor to protect you. Furthermore, a short price reduction may encourage a sale even if that is not your intention.
Stop-limiting
In this case, you determine both the stop and limit prices. To illustrate, if your limit price is £27 and your stop price is £29, your order will execute as a limit order at or above £27 if the bid price of the stock decreases to £29. The danger is that if the stock declines too rapidly below the floor you've set, as might happen in a turbulent market, you may be unable to sell at all.
3. Completing: Finalising the Trading Ticket
You cannot make a good deal with a bad person.
Warren Buffett (Source)
If you're using a broker to sell, you'll need to submit a trade ticket or order using the broker's website or trading platform. In the vast majority of cases and with the vast majority of brokers, the settlement date of a transaction is two business days following the day the order is executed.
It doesn't take long to complete the exchange ticket: Select “sell”, enter the stock's symbol, the number of shares, your order type (and limit or stop price, if applicable), and the “time in force” or order expiry, which is effectively how long the order should be open.
Options for time-in-force vary by order type, and security such as crypto, but often include the following:
- Market day close: If the order is not completed before market closing, the deal will be cancelled and the order will expire for the day. This is the standard starting point.
- Immediate or cancel: An order with an immediate or cancel deadline means that the order, or at least the unfulfilled part of it, must be fulfilled immediately.
- GTC: To clarify, a good-til-cancelled order is one that is valid until it is either completed or cancelled, however, brokers often impose time limits on how long an investor may keep a GTC order open.
- Fill or kill: In big share transactions, fill or kill is a common order type. In the event that an order is not completely completed instantly, the transaction will be cancelled.
- On open: Trades are executed at the opening price of the market.
- On close: Market closure fills at the previous day's closing price.
The default day option will usually work great here. As your knowledge of stock trading grows, you'll be able to go out into the market and do more sophisticated orders.
You wouldn't want to sell Amazon when you intended to sell Apple, so after you've finished filling out the form, give it a last read-through before pressing the submit button.
Using an Index Fund to Invest in Amazon
Index mutual funds and ETFs (exchange-traded funds) attempt to replicate as closely as possible the performance of a market benchmark (or “index”) such as the widely-followed S&P 500 Index. That's why some people call indexing a “passive” investing approach.
The fund management doesn't choose individual stocks or bonds to hold but rather purchases all or a proportionate portion of the stocks and bonds that make up the index the fund follows.
While investing in a single company's stock has its advantages, it also leaves you subject to large price fluctuations. Consequently, most consumers should put their money into index funds or exchange-traded funds (ETFs) that contain equities from a variety of different firms. Luckily, AMZN is widely held, including around 7% of Nasdaq 100 funds.
To Sum Up — How to Buy AMZ Shares
Although you’re probably looking to buy Amazon shares as a long-term investment plan, you don’t need to take forever to do so.
Here’s the quickest method to buy AMZN shares in the UK below.
- 🌐 To begin, sign up with eToro by visiting their website and clicking the “Register” button there. Set up your login credentials by filling in your details. Your capital is at risk.
- 📁 Next, verify your identity and the billing address associated with your eToro account before making any bitcoin purchases.
- 💳 Third, fund at least $50 in your trading account.
- 🛒 4 – Shop. Simply enter “AMZN” in the search bar and click “Trade” to buy Amazon shares.
