Investors would be well-advised to buy shares of Amazon (NASDAQ:AMZN) before the e-commerce giant reports second-quarter financial results on August 1 of this year.
In the last 12 months, Amazon stock has gained 40%. It’s been a big turnaround for the company, which struggled for nearly two years coming out of the pandemic. After over hiring and overbuilding during the COVID-19 crisis, Amazon was forced to downsize its operations and adjust to the return of in-person shopping.
AMZN stock also took a hit during the 2022 bear market as inflation peaked at 9.1% and interest rates were lifted to a 22-year high.
While it wasn’t easy, Amazon has emerged on the other side of the storm seemingly stronger than ever and there’s plenty of reason to be bullish about the company and its stock heading into the upcoming Q2 print.
Amazon Just Saw a Record ‘Prime Day’
Amazon just concluded its summer “Prime Day” sales event, and preliminary results show that it was a resounding success. In fact, data from Adobe Analytics shows that the July Prime Day generated a record $14.2 billion in online sales, up 11% from last summer’s event and topping the estimates of Wall Street analysts. Adobe said the record sales were largely driven by back-to-school shopping and a “product refresh cycle” as consumers bought new electronics such as tablets and television sets.
Amazon’s own forecasts had called for about $14 billion in online sales during the event held on July 16 and 17. Amazon has issued a statement acknowledging “record-breaking sales” for this latest Prime Day but has yet to disclose its own final sales figures. However, Adobe noted that shoppers spent more per order at this summer’s Prime Day event, with an average order size of $57.97 compared to $54.05 a year ago. Other top selling items were household essentials and apparel and shoes, said Adobe Analytics.
Amazon holds Prime Day sales events twice a year, in the summer and autumn. They have become a big revenue driver for Amazon and show that the company’s core e-commerce business remains extremely healthy.
AMZN Hit a $2 Trillion Market Cap in June
Beyond its main e-commerce business, Amazon is also exhibiting strength in several other areas of its business, notably its Amazon Web Services (AWS) cloud computing unit and Amazon Prime streaming service. Amazon stock really took off after Q1 results showed that AWS is recovering after businesses cut back on spending during the pandemic. Additionally Amazon Prime added advertising and live sports to in recent months. All these strengths have propelled Amazon stock higher over the past year, leading to a milestone $2 trillion market capitalization at the end of June this year.
The company achieved the $2 trillion market cap when its stock finished trading at $193.61 per share on June 26. While the share price has since pulled back with the sector rotation out of technology securities, its market cap continues to hover near $2 trillion. It took Amazon only four years to go from a $1 trillion market valuation to $2 trillion.
Analysts praised Amazon’s $2 trillion market cap, stressing that the company’s disciplined cost-cutting initiatives over the past two years have helped to boost the company’s earnings and, in turn, its stock price.
Buy Amazon Stock
AMZN stock currently holds a consensus “strong buy” rating among 44 Wall Street analysts who track the company’s progress. All 44 ratings on the stock are a “buy” with a median price target that is 22% higher than the current share price. To say Wall Street is bullish on Amazon is an understatement.
If there’s been one complaint about Amazon it is that the company hasn’t joined the other mega-cap technology companies in paying a dividend to shareholders. But you never know, the company could announce a dividend payment along with its Q2 print. Regardless, Amazon stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.