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  • Investors are concerned that Amazon’s stock price may be overvalued, and the downward trend in the company’s stock price indicates that this is the prevailing view.
  • Yesterday morning, Amazon announced a new “48-hour event” in October that “gives Prime members exclusive early access to holiday deals,” which will include items from several popular brands including Peloton and New Balance.
  • The battle between Amazon and Walmart is particularly interesting. Walmart, which has long held the position of the largest physical retailer in the United States, is making strides online.

Amazon’s huge popularity as an online marketplace has translated into significant gains in its share price over the years. After hitting the stock market at $18 in 1997, the company’s stock price was all-timey $175.35 in late 2021. Since then, the share price has fallen to its current level of $115.15 as of September 26, 2022 and there are 3 shares split.

The sharp drop leaves us wondering whether or not Amazon’s stock has peaked. Let’s explore the financial matters.

Amazon trends

For online shoppers, Amazon is everywhere. As the company rose to dominate online sales, becoming the marketplace of choice for everything from books to groceries, it also expanded into other markets. For example, it now offers cloud services, advertising opportunities, its own entertainment studio, streaming service, and more to add to the bottom line.

The company has solidified its position as a giant that is unlikely to leave the world any time soon. Although the company has strength in the competitive market, its large size may hinder the growth of its stock. After all, many companies are struggling to make eye-catching gains after reaching such a huge scale.

What do the numbers say about the Amazon stock position? Here is a closer look.

stock price trends

Over the years, Amazon has set some impressive numbers. If you’re curious about its growth over time, here’s how things have changed as of May 25, 2022:

  • 30.716% share price growth over 20 years
  • 1.826% share price growth over 10 years
  • Share price growth 345% in 5 years
  • Share price growth 122% in 3 years

But what about the latest stock price trends? After a peak of $175.35 in November 2021, the stock price has fallen to $115.15 as of September 26, 2022. Of course, stock prices are inherently volatile to key market factors, and there were a lot of those between November 2021 and September 2022.

However, the drop in Amazon's stock price understandably worries some investors.

Amazon Web Services Growth

Amazon Web Services (AWS) has long served as the company's financial powerhouse. Even when other areas of business aren't as profitable as they seem, AWS picks up the slack.

Although AWS is still very profitable, it is not growing as fast as it was before. In the second quarter of 2022, the AWS portion of Amazon grew 33%, down from the 40% annual growth achieved in the fourth quarter of 2021.

If AWS growth continues to slow, it could lower the company's gross profit. Of course, Amazon has other sources of income. But AWS is a huge and profitable business.

Consumer preferences

With the development of e-commerce, consumers have flocked to Amazon. For a while, it seemed like Amazon would forever be the online store of choice for many shoppers. But a 2019 survey by First Insight found that may not be the case.

According to the survey, 55% of shoppers answered that they prefer shopping at Walmart rather than Amazon. If true in the coming years, this could cause a problem.

income and sales

Sales are the lifeblood of any company. Without access to funds, it is difficult to move the needle towards growth.

Operating income was $3.3 billion in the second quarter of 2022, down from $7.7 billion in the second quarter of 2021. However, net sales increased to $121.2 billion in the second quarter of this year. That represents a 7% increase from $113.1 billion in the second quarter of 2021.

In a second-quarter earnings report, CEO Andy Gacy wrote, "Despite continued inflationary pressures in fuel, energy, and transportation costs, we are making progress on the more manageable costs we noted in the last quarter, particularly improving the productivity of our fulfillment network. He also cited revenue growth as a result of more major perks such as free food delivery and exclusive access to Thursday night NFL football matches.

In general, the report sounded optimistic about the company's future. But it's impossible to say whether or not the company's stock will continue to grow in the fast segment that Amazon investors are accustomed to.

Best competitors

Although Amazon is the largest online marketplace for consumer goods, it is not the only place where people can shop online. In fact, many shoppers feel comfortable making online purchases elsewhere.

A few of the top competitors include Walmart, Target, and countless other online stores that are led by more desirable brands and services. The battle between Amazon and Walmart is particularly interesting. Walmart has long been the largest physical retailer in the US and with thousands of physical stores, Walmart appears to be using its footprint as a launching pad for quick deliveries to compete with the online giant. Conversely, Amazon uses its Whole Foods locations, as well as relationships with other (often struggling) retailers to generate more favorable returns.

Walmart and Amazon both seem to have a bright future, and it would be great to see how the two companies will face when they start encroaching on each other's territory and value proposition.


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