AMZN stock investors needn't worry as Amazon will be back in the Trillion Dollar Club
After years of astounding growth, Amazon(NASDAQ:AMZN) is currently out of favor among investors. Some traders reacted negatively to Amazon’s third-quarter 2022 earnings report. Others didn’t like to see the e-commerce giant halting some of its hiring activity. Yet, there are reasons to believe that AMZN stock will return to its all-time high and then reach the $200 mark in five years.
It was all over the financial headlines and social media: Amazon got kicked out of the Trillion Dollar Club recently. To put it more precisely, the company’s market capitalization fell below $1 trillionfor the first time since April 6, 2020.
Does this mean that Amazon shares aren’t a good buy-and-hold anymore? Let’s not jump to conclusions before checking the company’s financial stats. You might be surprised to discover that Amazon is still a robust revenue generator as well as a profit powerhouse.
Hiring Freeze Isn’t the End of the Road for Amazon
For one thing, the Trillion Dollar Club is a “construct.” By this, I mean it’s something people invented in their minds though it doesn’t necessarily have actual significance. Just because Amazon’s market cap fell below a figure with lots of zeros, doesn’t mean that the company is failing as a business venture.
Besides, as we’ll discuss in a moment, Amazon’s financial growth suggests that the company will re-enter the Trillion Dollar Club in due time. Yet, there’s another news item that seems to be bothering some investors.
In particular, Amazon is reportedly freezing its hiring activity. However, this is only for the company’s corporate-level employees. Also, this hiring pause is only anticipated to “be in place for a few months.” In addition, Beth Galetti, senior vice president of people experience and technology at Amazon, assured that the company still plans to hire a “meaningful number of people” next year.
Amazon Met or Beat Quarterly Expectations
AMZN stock declined sharply after the company reported its Q3 2022 financial results. However, nervous investors should delve into the numbers before pronouncing their judgment on Amazon.
Starting with the top-line results, Amazon’s revenue grew from $110.8 billion in the year-earlier quarter, to $127.1 billion in 2022’s third quarter. Plus, this result was practically in line with Wall Street’s forecast of $127.39 billion.
Furthermore, Amazon reported a quarterly profit of 28 cents per share. Analysts had anticipated 22 cents per share. So, that’s a notable beat for Amazon.
Some traders probably expected a huge revenue beat, but perhaps they’re forgetting that this is a challenging time for e-commerce. The persistently strong U.S. dollar has hindered Amazon’s growth this year. However, no currency stays strong forever. Once the dollar’s rally stalls, Amazon’s growth trajectory should get back on track.
So, Where Will AMZN Stock Be in Five Years?
Instead of thinking like a short-term trader, I invite you to look past today’s obstacles and consider Amazon’s long-term growth narrative. The bull market in the U.S. dollar won’t last forever. Besides, Amazon’s quarterly results weren’t terrible, by any means.
When Amazon is back in Wall Street’s favor again someday, the company should easily return to the Trillion Dollar Club. Then, AMZN stock will be free to run much higher. Consider $200 an easy target for five years, and think about holding your Amazon shares for outstanding long-term returns.
On the date of publication, David Moadeldid 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.comPublishing Guidelines.
FAQs
Amazon has a mean target price of $202.49, which is 12% higher than yesterday's closing prices. Its Street-high target price of $230 implies an upside of 27.2% over the next 12 months. Analysts are overwhelmingly bullish on Amazon, and multiple brokerages listed it as a top pick for 2024.
Is Amazon stock good for long term? ›
It's one of the most reliable long-term holds
Shares in Amazon fell 50% in 2022 alongside steep profit declines in its e-commerce segments. However, the company has made an impressive recovery, proving its reliability and resilience.
Will Amazon reach $1,000 again? ›
Future Outlook for Amazon Stock
It took seven and a half years for Amazon to reach $1,000 from $100 and it's very possible that it could hit $10,000 between 2023 and 2025. Amazon's potential to grow could continue over time.
Is Amazon a good investment for the next 5 years? ›
After posting a loss in 2022, Amazon's earnings bounced back in a big way last year. Now, Wall Street analysts are expecting further earnings growth for 2024. Consensus projections see Amazon's posting adjusted earnings of $4.17 per share for the December 2024 fiscal year, according to FactSet.
What will Amazon stock be worth in 2040? ›
Amazon price prediction key takeaways:
A more realistic projection, based on the historical yearly average of the S&P 500, suggests a price of $1,052 by 2040 and $3,023 by 2050 (which would be a +1,627% increase compared to current rates).
Is Amazon a good buy in 2024? ›
The stock has done well so far in 2024. Amazon (AMZN 2.82%) has had a great first quarter of the year, with the stock rising around 20%. But I think that's just the beginning. Amazon has a lot going for it, making it a great buy even after its recent run.
Has Amazon stock ever been $2,000? ›
Amazon stock hit $2,000 per share for the first time Thursday.
How high can Amazon stock go? ›
AMZN Stock 12 Month Forecast
Based on 41 Wall Street analysts offering 12 month price targets for Amazon in the last 3 months. The average price target is $210.00 with a high forecast of $230.00 and a low forecast of $175.00. The average price target represents a 12.93% change from the last price of $185.95.
What will Tesla stock be worth in 2025? ›
What will Tesla be worth in 2025? Projections for the TSLA rate in 2025 vary significantly among analysts, with estimates ranging from a stock price above $300 to $3,000 per share.
How much is $10 000 invested in Amazon 20 years ago? ›
Those gains translate to a 23.2% compound annual growth rate for Amazon compared to a 6.2% CAGR for the S&P 500 in that time. As a result, $10,000 in AMZN stock purchased 20 years ago would now be worth $645,262. A $10,000 investment in the S&P over the same period, however, would amount to $33,452.
Over the last 10 years, Amazon stock has been a beast, returning roughly 856% to investors. That amounts to almost nine times your initial investment in a single decade. That return far outweighs that of the S&P 500, which managed a still impressive 174% over the same period.
Is it smart to buy stock in Amazon? ›
After examining many stocks in today's market, I've concluded that Amazon (NASDAQ: AMZN) is one of the best buys available. Even though it's had a strong 2024, up 11%, I still think there is room for upside. I've pinpointed five factors that make Amazon a strong buy now, even with its great performance in 2024.
What will Amazon be worth in 2025? ›
If we apply the S&P 500's average price-to-earnings ratio (P/E) of 27 to this $70 billion in earnings, Amazon's stock would have a market cap of $1.89 trillion in 2025. This is slightly higher than the current $1.77 trillion valuation.
How high can Amazon stock go up? ›
Average Price Target
Based on 41 Wall Street analysts offering 12 month price targets for Amazon in the last 3 months. The average price target is $209.74 with a high forecast of $230.00 and a low forecast of $175.00. The average price target represents a 13.26% change from the last price of $185.19.
How much will Amazon stock be worth in 2040? ›
Amazon price prediction key takeaways:
A more realistic projection, based on the historical yearly average of the S&P 500, suggests a price of $1,052 by 2040 and $3,023 by 2050 (which would be a +1,627% increase compared to current rates).
Is Amazon a long term growth stock? ›
Looking at cash flow, Amazon is expected to report cash flow growth of 59.4% this year; AMZN has generated cash flow growth of 25.3% over the past three to five years. With solid fundamentals, a good Zacks Rank, and top-tier Growth and VGM Style Scores, AMZN should be on investors' short lists.
 Stock Be in 5 Years? (2024))
