Online retailer Amazon.com (AMZN) reported a record quarterly profit of over $8 billion. Because of its existing competitive advantage, the AMZN stock achieved this result. There are several factors that influence the long-term growth of Amazon.
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Despite being based on direct sales, Amazon’s business is a low-profit segment. In addition, the AMZN stock is experiencing significant growth due to its provision of a trading platform and services for third-party sellers. Around 55% of the goods sold through Amazon in the first quarter came from independent sellers. Its clients count in the thousands, it has an extensive distribution network and it enjoys virtually no competition. Most of Amazon’s capital expenditures went towards logistics last year, increasing its speed of delivery and throughput. Third-party sellers will be more inclined to use the platform.
A second driver is digital advertising. Amazon is currently the third-largest online advertising platform in the United States, after Facebook and Alphabet. Advertising revenue does not constitute its own category, but it makes up a majority of other revenue. The segment’s sales grew by 77% last quarter, finishing at $6.9 billion. New advertising products were developed to increase relevance and convert consumers, and conversions increased.
Furthermore, Amazon continues to develop its cloud computing segment, called Amazon Web Services. During the first quarter, the division’s revenue grew 32% compared to a year ago, and operating income grew 35% to $ 4.2 billion. However, the AMZN stock noticed a rise in the expenses for their large number of customers at the same time. It’s much tougher to beat Amazon in the cloud computing industry than it is to beat an e-commerce platform. Despite the heightened competition in the cloud computing market, there will always be a demand for AWS.
The Amazon.com (AMZN) stock price was $3380.0 at the last check-in after-market trading session. Last session, AMZN stock closed at $3386.49, down -2.33% or -$80.93. Throughout the day, shares of the AMZN stock fluctuated between $3,372.701 and $3,486.645. There were 5.88 million shares exchanged, a higher number than the AMZN stock’s 50-day daily volume of 3.62 million and greater than its Year to date volume of 3.67 million. The stock of the AMZN stock moved down 0.66% last week after increasing 48.14% in the last year. For the last six months, the stock has gained a total of 5.46%, and over the last three months, the stock has increased by 1.30%. Since the beginning of the year, the stock has returned 3.98%. Additionally, the stock is trading at a price-to-earnings ratio of 64.45.