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Amazon Stock Hits a Fresh High: What's Driving the Increase?
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Shares of Amazon.com, Inc. (AMZN - Free Report) hit an all-time high of $876.44 on Mar 29, before closing a tad lower at $872.32.
The week so far has been a blockbuster hit for Amazon and investors cheered the company’s latest moves all announced on Tuesday. The result is a 2.14% increase in stock price at the end of yesterday’s trading, lifting CEO Jeff Bezos’ net worth by $1.5 billion and making him the world’s second richest person.
Let’s discuss what’s driving the surge.
The Deal to Acquire Souq.com is Final
Amazon confirmed on Tuesday that it has agreed to the takeover but did not shed light on the terms of the deal. The deal materialized despite the eleventh hour bid of $800 million by Mohamed Alabbar’s Dubai-based Emaar Malls.
The deal gives Amazon a strong foothold in the Middle East and a much needed boost to its international expansion efforts at a time when its e-commerce business is facing tough competition from Alibaba (BABA - Free Report) and eBay (EBAY - Free Report) . According to the two companies, there is tremendous potential in the region and this alliance will help them to become a major player.
We believe there is great potential in this alliance. Amazon is a major player in the global online retail industry and possesses years of experience in the space. This coupled with Souq’s expertise in the Middle East bodes well for the merged company.
What we think has particularly impressed investors about this deal is that Amazon is picking up the buy option over build. This means that Amazon will start generating revenues in the region right way without wasting any time in building its own infrastructure.
We note that Amazon’s shares appreciated 47.5% in the last one year compared with the Zacks Internet Commerce industry’s gain of 38.3%. International expansion is expected to back the momentum going ahead.
Concurrent with the announcement, Amazon rolled out Amazon Connect, a self-service, cloud-based contact center service that enables businesses to build scalable customer service at a lower cost. The new service is based on the same technology that powers Amazon’s own customer service and is nicely amalgamated with other services on the AWS platform.
This underscores Amazon’s growing interest in creating industry specific solutions on top of Amazon Web Services (AWS). Just like it is adding abilities to Alexa-powered Echo devices to penetrate every stream of business, it is developing specific end-to-end solutions to boost its presence in multiple industries.
With Amazon expanding its presence in multiple industries, investors are likely to hold on to the stock.
Amazon.com, Inc. Net Income (TTM)
AmazonFresh Pickup
On the same day, Amazon announced a new drive-in-grocery delivery service called AmazonFresh Pickup. Customers can order groceries online and collect them from a store at a convenient time. Two stores are currently under trial in Seattle, WA.
Amazon plans to expand it to all Prime members going forward. The move gives Amazon a competitive advantage over the likes of Wal-Mart (WMT - Free Report) . This again is a reason for investors to cheer as Amazon continues to push advantages to Prime members, thus encouraging them to spend more.
In fact, Prime Now, the company’s super -fast delivery service, is expanding rapidly in the U.S. It is now available in more than 30 cities, the latest being Milwaukee. Prime is now widely available and generates increased sales for Amazon.
To Conclude
The latest surge indicates that investors are encouraged about Amazon’s international expansion and grocery initiatives and its efforts around AWS. Calling Amazon, the world’s largest online retailer would be too little to reflect its enormous power. The company capitalizes largely on its execution strength, robust performance and technological prowess.
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Amazon Stock Hits a Fresh High: What's Driving the Increase?
Shares of Amazon.com, Inc. (AMZN - Free Report) hit an all-time high of $876.44 on Mar 29, before closing a tad lower at $872.32.
The week so far has been a blockbuster hit for Amazon and investors cheered the company’s latest moves all announced on Tuesday. The result is a 2.14% increase in stock price at the end of yesterday’s trading, lifting CEO Jeff Bezos’ net worth by $1.5 billion and making him the world’s second richest person.
Let’s discuss what’s driving the surge.
The Deal to Acquire Souq.com is Final
Amazon confirmed on Tuesday that it has agreed to the takeover but did not shed light on the terms of the deal. The deal materialized despite the eleventh hour bid of $800 million by Mohamed Alabbar’s Dubai-based Emaar Malls.
The deal gives Amazon a strong foothold in the Middle East and a much needed boost to its international expansion efforts at a time when its e-commerce business is facing tough competition from Alibaba (BABA - Free Report) and eBay (EBAY - Free Report) . According to the two companies, there is tremendous potential in the region and this alliance will help them to become a major player.
We believe there is great potential in this alliance. Amazon is a major player in the global online retail industry and possesses years of experience in the space. This coupled with Souq’s expertise in the Middle East bodes well for the merged company.
What we think has particularly impressed investors about this deal is that Amazon is picking up the buy option over build. This means that Amazon will start generating revenues in the region right way without wasting any time in building its own infrastructure.
We note that Amazon’s shares appreciated 47.5% in the last one year compared with the Zacks Internet Commerce industry’s gain of 38.3%. International expansion is expected to back the momentum going ahead.
Amazon.com, Inc. Net Income (TTM) | Amazon.com, Inc. Quote
Amazon Connect Rollout
Concurrent with the announcement, Amazon rolled out Amazon Connect, a self-service, cloud-based contact center service that enables businesses to build scalable customer service at a lower cost. The new service is based on the same technology that powers Amazon’s own customer service and is nicely amalgamated with other services on the AWS platform.
This underscores Amazon’s growing interest in creating industry specific solutions on top of Amazon Web Services (AWS). Just like it is adding abilities to Alexa-powered Echo devices to penetrate every stream of business, it is developing specific end-to-end solutions to boost its presence in multiple industries.
With Amazon expanding its presence in multiple industries, investors are likely to hold on to the stock.
Amazon.com, Inc. Net Income (TTM)
AmazonFresh Pickup
On the same day, Amazon announced a new drive-in-grocery delivery service called AmazonFresh Pickup. Customers can order groceries online and collect them from a store at a convenient time. Two stores are currently under trial in Seattle, WA.
Amazon plans to expand it to all Prime members going forward. The move gives Amazon a competitive advantage over the likes of Wal-Mart (WMT - Free Report) . This again is a reason for investors to cheer as Amazon continues to push advantages to Prime members, thus encouraging them to spend more.
In fact, Prime Now, the company’s super -fast delivery service, is expanding rapidly in the U.S. It is now available in more than 30 cities, the latest being Milwaukee. Prime is now widely available and generates increased sales for Amazon.
To Conclude
The latest surge indicates that investors are encouraged about Amazon’s international expansion and grocery initiatives and its efforts around AWS. Calling Amazon, the world’s largest online retailer would be too little to reflect its enormous power. The company capitalizes largely on its execution strength, robust performance and technological prowess.
Currently, Amazon is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>