Amazon stock forecast

Amazon Stock Forecast: What the 20:1 AMZN Stock Split Means

Ever since Jeff Bezos started Amazon (NASDAQ:AMZN) as an online book retailer in 1994, people have doubted the company’s long-term success. Today, Amazon owns the fifth highest market cap in the world, but few would argue that it is the most valuable brand and nobody would bat an eye if it overtook Apple (NASDAQ:AAPL) at some point in the future.

Amazon hit headlines last week following the companies decision to complete a 20-1 Stock Split alongside a huge $10 Billion Share Repurchase of AMZN stock. The Split means investors will receive an additional 19 shares for the one already held, substantially increasing the amount of shares outstanding which lowers the price. The company will also be repurchasing shares, which removes shares from circulation, inflating the price. The move will likely spur on capital gains, encouraging investors to hold their shares.

But for new investors, is Amazon stock a buy after its recent downtrend? Or have you missed the boat on one of the greatest investments in the history of the stock market? Here’s everything investors need to know about the Amazon Stock Forecast.

Wallstreet remains Bullish on the Amazon Stock Forecast

The first thing inexperienced investors will do is look at Amazon’s daunting share price and not even consider it as an investable stock. Trust me when I say, investors have been doing that with Amazon since it was an unprofitable company trading for a few hundred dollars per share.

If you invested in Amazon a decade ago, the stock would have returned over 1,700%. Share price should never be what determines if a stock is expensive or not. 

Nevertheless, Amazon retains its position as one of the most upgraded stocks on Wallstreet. Remarkably, across the board of 42 Wallstreet analysts all 42 have currently listed a Buy rating on Amazon. Here’s the most recent coverage on Wallstreet simplified.

Amazon stock forecast
San Pellegrino terme, Italy – November 2, 2019: Internet browser with amazon store page

Amazon Stock split ‘an important, positive signal,’ according to Morgan Stanley 

Following Amazon’s decision for a 20-to-1 stock split, Amazon also repurchased $800 Million of shares while authorising an additional repurchase of $10 Billion in common stock. Morgan Stanley analyst Brian Nowak said the stock split is “more symbolic than material” but the announcement alongside the buyback strategy are “an important, positive signal” for investors.

Nowak remains bullish on the Amazon Stock Forecast with an Overweight rating and $4,200 price target on the stock. Interestingly, Amazon Stock is one of the very few companies who is still recieving bullish coverage from Wallstreet, as the wider tech market fumbles.

Goldman Sachs sees 15% growth rate over the next few years

Another Wallstreet analyst, Eric Sheridan from Goldman Sachs initiated coverage of with a Buy rating and $4,250 price target. The analyst noted the industry Amazon operates in still has “ample opportunities” for secular revenue growth.

Sheridan sees Amazon as a long term play for internet investors. Furthermore, the analyst added that Amazon can sustain 15% plus growth rate over the coming years.

Can Amazon Double Revenues By 2025? Wallstreet Thinks So.

According to S&P Global Market Intelligence data, analysts expect Amazon revenue to jump to $821 Billion by 2025. To put this growth into perspective, analysts are expecting Amazon to generate $476.32 Billion for 2021. As a Blue Chip company, revenue growth at these levels are much rarer as companies enter a maturity stage of declining growth.

However, Amazon continues to outperform its competition with high end CAGR’s and a strong outlook according to analysts. The big challenge for Amazon will be supply constraints as their e-Commerce business will feel the pinch of inflation on costs alongside greater bottle neck shortages across the globe.

Is Amazon stock the same without Bezos?

First of all, Amazon isn’t really without Bezos anymore. He’s promoted himself to the role of Executive Chairman while Andy Jassy resumes the role of CEO. Amazon revolutionized the global retail business and changed the way we think about eCommerce forever.

Think about how disappointing it is when you order something from another site and next day shipping isn’t an option. But the future of Amazon arguably lies in the Amazon Web Services Cloud segment (AWS) of its business. No matter how big Amazon scales its eCommerce business to be, it simply cannot compete with the rapid growth and low margins of AWS.

In 2021, AWS already accounted for 12% of the company’s total revenues, and many on Wall Street would value AWS at over $500 billion if it were spun off into a separate entity. So when AWS soon becomes Amazon’s largest money maker, who better to lead the company than the founder and creator of AWS: Andy Jassy. 

Amazon stock forecast
Amazon stock chart

Amazon Stock Forecast: The Bottom Line

In summary, Amazon continues to outperform with Wallstreet analysts maintaining a very strong bullish outlook on the stock. In addition, analysts see Amazon revenue continuing to compound at a high growth rate over the coming years. Overall, the general consensus points towards strong revenue growth even with Jeff Bezo’s out of the picture.

As discussed, The big challenge for Amazon will be supply constraints as their e-Commerce business will feel the pinch of inflation on costs alongside greater bottle neck shortages across the globe.

The information above is not financial advice and does not constitute as a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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Amazon Stock Forecast: What the 20:1 AMZN Stock Split Means

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