Amazon is a Seattle-based cloud computing service that specialises in e-commerce, digital streaming, and artificial intelligence. It is considered one of the world’s largest companies and is branded as one of the “big five” U.S. tech companies, along with Alphabet (Google), Apple, Microsoft, and Facebook.
Bezos founded Amazon out of his garage in July 1994. It initially focused on selling books, as Bezos realised that would allow the company to pull in a wealth of data on affluent consumers. It soon started to branch out into selling video games, electronic devices, home improvement items, software, board games, and toys.
The online retailer went public in May 1997 and continued to expand its range of products. In 1999, Time named Bezos its Person of the Year for his efforts in popularising online shopping. The firm launched Amazon Web Services in 2002, which would evolve into its highly lucrative cloud computing arm following the 2006 acquisition of Elastic Compute Cloud.
Amazon finally turned a profit for the first time in Q4 2001, earning $0.01 per share on revenues of more than $1 billion. It took another huge step forward by launching Amazon Marketplace, which allows third-party merchants to sell to Amazon customers. This now accounts for more than half of all sales on Amazon.
The e commerce giant has expanded its online service rapidly in recent years, snapping up Whole Foods, Twitch, Ring, Pill Pack, and Zappos.com along the way. Prime subscribers will also be aware of the fantastic collection of movies, series, and TV programs that are available to rent, buy or stream for free.
It is building a second HQ in Virginia at a cost of $2.5 billion, and it continues to invest heavily in AI and cloud capacity while building its own Amazon brand delivery service. It reported revenue of $386 billion in 2020, and net income of $21.3 billion, and it has around 800,000 employees spread across the globe.
In 2021, Bezos announced he would step down as chief executive and transition to executive chair, with Andy Jassy taking over as chief executive.
Historical performance of Amazon stock
Amazon made its debut on the NASDAQ exchange under the symbol AMZN following its IPO in May 1997. It was initially priced at $18 per share, but it had surged to $105 by 1999 amid a frenzy of investing in the nascent tech sector, with several stock splits taking place between 1998 and 1999. The tech bubble then burst, and the Amazon stock price had decreased to just $5.51 by October 2001.
Anyone that sold back then will be kicking themselves now. It rallied to around $22 by the end of 2002, but it took another seven years for Amazon stock to break back above the $100 mark, hitting a price of $119 in October 2009. It then went parabolic, soaring to more than $1,900 by September 2018.
A sharp economic downturn forced the price back below the $1,400 mark by December 2018, but it then rallied hard. It reached $2,000 for the first time in April 2020, as the Covid-19 pandemic was starting to force lockdowns across the globe, and it went on to hit a high of $3,552.25 later that year. Amazon stock’s price has traded above $3,000 ever since.
Trading Amazon CFDs
A CFD (contract for difference) is a financial derivative that allows you to speculate on an asset rising or falling in value without taking ownership of the underlying asset. You can use CFDs to trade shares, funds, cryptocurrencies, and more.
The CFD investment process begins by taking a position on whether you believe the company’s shares will rise or fall in price. If you believe its price will increase, you can go long which means you are buying contracts on it. If you think the value will decrease, you can go short, acting as the seller in a CFD.
By trading CFDs, the buyer agrees to pay the seller the difference between the Amazon shares price at the start of the contract and the Amazon shares price at the end of the contract. The more the price moves in your favour, the higher the profit you make. However, you will incur losses if the price moves against you, so you have to be careful and conduct thorough research before trading.
Once successfully funded, visit the “Markets” page, head to the international shares section, and click on Amazon shares (you can also manually enter AMZN in the search bar). You will then see a chart detailing recent performance, and you can either click “Go Short” or “Go Long”. The small difference between the selling price and the buy price is known as the spread, which is a universal feature at CFD trading sites.
Decide if you want to go short (sell) or go long (buy), choose the number of contracts you wish to buy, and confirm the trade. You can close it when you are satisfied with its current position. If the price has moved in your favour, the difference will be credited to your account.
Predominantly, retail investor accounts lose money when trading due to a lack of research, understanding, and knowledge of how the news regarding Amazon web services will affect the market, and how to make use of charting tools, stop-losses, and take-profit trades.
The benefits of trading Amazon CFDs
Price is accessible to all
Share dealing has always been the main way in which Amazon shares are traded. However, this method requires traders to purchase full shares, which could be considered expensive to buy. By trading CFDs you can simply speculate on the future price of AMZN, creating a strategy relating to short or long-term predictions and profiting from the price movement related to your entry point.
The ability to move with the market
As we mentioned above, share dealing requires traders to buy Amazon shares from the stock market in full in the hope of selling them later down the line for a profit. While trading CFDs, traders can opt to go long or short allowing traders to potentially profit from positive or negative market movement.
Potential profits can be made in the short and long-term
It provides you with the opportunity to make larger profits off of the short-term share price. Amazon is not a volatile asset like Bitcoin, and it is not prone to wild fluctuations, so you would probably need to buy a large number of shares in order to make several thousands of pounds in profit on a short-term basis. That is not the case with CFDs, as you can take out several contracts and capitalise upon the difference if the price moves in your favour.
Traders can set their own profit and loss limits
Stop-loss and take-profit orders are available when you trade Amazon CFDs. A take-profit order locks in a profit when the share price of AMZN reaches a certain value, while a stop-loss order is a free insurance policy that prevents you from incurring losses past a specific point.
How to predict price movements
Advanced traders often use fundamental analysis, technical analysis, or a combination of both in a bid to predict how Amzn stock will fare in the short term. However, there is always a significant risk attached to any form of international stocks trading.
Fundamental analysis can focus upon classic key metrics such as the price to book value, per share earnings, and interest rates. Essentially, traders are aiming to work out if a stock is overvalued or undervalued.
Traders might be more inclined to focus on specific events that could cause the price to rise or fall as the market opens on a particular day. For example, it might be set to unveil its latest quarterly reports, it might be launching a new service or there could be a vote on whether workers should form a union. The outcome of these events will have a direct bearing on the shares traded and an impact on the short-term Amazon shares price. You can also consider the wider economic and market situation, deciding whether or not it favours Amazon.
Technical analysis focuses more heavily on volumes traded, the put-call ratio, and so on. It seeks to identify historical trends and past performance that can provide an indication as to how the stock will perform in the future. Analysts are ultimately trying to figure out whether a trend will continue or reverse, and when the tides may change. With complex financial subjects like Amazon company shares, it might be worth conducting a combination of fundamental and technical analysis before surpassing your minimum deposit limit and making your first trade.
If you are completely new to the stock market, you may wish to seek independent advice to help decipher whether to buy Amazon shares, buy/sell Amazon CFDs, or if Amazon is a good investment at all.
Future prospects for Amazon
“When somebody congratulates Amazon on a good quarter, I say thank you, but what I’m thinking to myself is those quarterly results were actually pretty much fully baked about three years ago,” said Bezos in one famous interview. His executive team is already working on what will happen several years into the future.
The company is already leading the way in online retail, investing in cashier-free stores, food delivery services, biometric payments, AI-powered home robots, innovative healthcare, self-driving cars, and much more, while continuing to establish itself as a leading light within the cloud computing space.
Although this should not be considered investment advice, we would suggest the uptrend of AMZN is destined to continue long into the future. However, Amazon’s share price will not go up in a straight line, and anyone trading Amazon CFDs will need to remain focused on the short-term ebbs and flows caused by general sentiment, the financial markets condition, and specific events.