Amazon Stock: Prime is about to get stickier

E-Commerce Titan Amazon (AMZN) unveiled some pretty exciting innovations that could help it hit the $2 trillion mark in market capitalization – a level that was within reach less than a year ago.

Undoubtedly, Amazon Web Services continues to grow at a rapid pace. However, new services such as “Buy with Amazon Prime” are opening up the company’s logistics and payment solutions to the world.

Equities have been treading water alongside the rest of the broader market lately. Retail could find itself on the side of the beneficiaries as the consumer slump approaches. Still, it’s hard to count one of the most disruptive forces in the tech scene, even if the macro picture doesn’t look too good.

Amazon’s Core Service Is Coming To Its Peak

Indeed, logistics can be an extremely capital intensive activity. Over the years, Amazon has consistently made the right investments (including overspending in recent quarters) so it’s now ready to offer storage and rapid transit as a service.

Undoubtedly, Amazon could do to the logistics market what it did to the public cloud. At first, Amazon hosted the cloud for itself before opening up to the public.

I think “Buy with Prime” is a deeply disruptive model that other Prime retailers and customers could embrace with open arms. Who wouldn’t want the convenience of two-day shipping and fast payments?

The service is a punch in the gut for the many payment companies that can’t offer what Amazon can. Indeed, the number of payment buttons on merchant sites is increasing and promises of fast delivery are essential to obtain the most clicks from buyers.

It’s not just the expansion of Prime delivery to other websites that makes Prime one of the stickiest services out there. The number of benefits appears to be growing, with Amazon recently taking a small stake in GrubHub while also announcing a one-year inclusion of GrubHub+ for its Prime members in the US market.

Amazon’s shift to food delivery just makes sense. Over the next year, I believe the food delivery market will feel the disruptive impact of the e-commerce giant.

Disrupt markets that are ripe for disruption

If there are economic profits to be made in a market where no company has formed a moat around its business, Amazon can rush in like a hawk. Indeed, high capital expenditure is not a concern for the deep-pocketed giant who uses size to his advantage better than most other companies.

The food delivery market, physical retail, digital payments and logistics are just some of the key areas where Amazon could thrive by leveraging the powerful network effects of its Prime service.

As interest rates rise and investors become less willing to pay for companies that continue to spend money to stay competitive, we could see a more aggressive push from Amazon. If he sees an opportunity to pressure potential rivals, especially the smaller ones, he will.

In a higher rate environment, where money is not so easy, fortune could favor giants like Amazon as they seek to develop their disruptive capabilities.

By giving consumers great value for their dollar, Amazon could emerge from any coming economic downturn much stronger than it entered it.

Wall Street’s view of AMZN

As far as Wall Street is concerned, AMZN stock is looking like a strong buy. Out of 39 analyst ratings, there are 38 buy recommendations and one hold.

Amazon’s average price target is $176.38, implying around 55% upside potential. Analyst price targets range from a low of $107.00 per share to a high of $270.00 per share.

AMZN Smart Score Review

Interestingly, AMZN has a Smart Score rating of 8 out of 10 on TipRanks. This implies that it is likely to outperform the market going forward, which is in line with analysts’ bullish stance.

The essential

Amazon’s disruptive capabilities have not diminished. Although a recession could weigh heavily on the coming quarters, Prime Day and other intriguing additions to the Prime service could help the company keep going as most other retailers are on the back foot.

It is becoming increasingly difficult to keep pace with the kingpin of e-commerce. With rates up and growth down, expect Amazon to apply even more pressure on many incumbents in the market who can’t seem to form any sort of moat.

Amazon is stepping on the accelerator, and it’s no mystery why Wall Street analysts have remained so incredibly bullish on the name despite the stock’s recent 40% drop.

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Disclaimer: The information in this article represents the views and opinion of the author only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. uniquely. At the time of publication, the author had no position on any of the titles mentioned in this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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