INVESTING IN AMAZON STOCK 📈 Is Amazon Stock A Buy In 2017?

[Music] how’s it going today guys so today we’re going to be talking about Amazon stock and whether or not I see Amazon stock at the buy right now and someone suggested that when I do this style of video I tell you guys in advance what my opinion of the stock is just so you guys know so in my opinion and obviously you guys have to do your own research on stocks I can’t tell you for sure whether a stock will go up but in my opinion I see Amazon stock as a buy and there are numerous reasons why this is but I basically picked my I think it’s six favorite reasons why Amazon stock is a buy and there are numerous other reasons I just didn’t want to make a 30-minute video about it I could always do a part two if you guys want me to talk about it more but I’m sure there are other reasons that Amazon stock is a buy and if there’s anything I missed make sure you guys share your comments in the comments below or if you guys disagree with me let me know why you think Amazon stock is overvalued or what your opinion is on Amazon stock but anyways Amazon is one of the most talked about stocks among investors Amazon stock is up 12% in the last three months 20% in 2017 alone 43% over the last 12 months and 476 percent over the last 60 months or the last five years so the stock has been in a nice uptrend very nice off trend over the last five years and it’s even come up a good amount in 2017 alone now Amazon is considered a mega cap stock with a market capitalization of 430 billion and they do not pay dividends which is kind of strange which may seem strange to you as a company that’s large for them not to pay dividends but it largely has to do with the way they run their business and that will also explain why their p/e ratio is so high so I’m going to talk about that in a second – what’s interesting about this is when you see a stock that’s way up you generally expect to see a lot of short interest on that stock those are people who are bearish on a stock expecting the stock price to go down however short interest on Amazon as of March 31st 2017 is four million seven or thirty eight thousand seven hundred seventeen shares or roughly one percent so it really is a short interest on Amazon is next to nothing AMD’s profit or sorry hip I’m always talking about a MBA mix-ups to their amazon the profit margin is one point seven four percent so that also maybe seems strange to you for such a large company with a market cap that large to have a profit margin so slim like that but this is basically because Amazon’s business model has them operating close to break-even and that’s why they’re so innovative because they’re re investing so much money into their business and all the different endeavors and I think largely to this is the way they operate because they don’t want investors to get used to the rings and the dividends because they don’t want investors to you know bail on Amazon if earnings go down so I think they operate as close to break-even as possible and they do this on purpose and we’re seeing this from a lot of businesses now and you even see businesses like snapchat where they’re operating at a significant loss just because they’re investing so much in innovation and I think that’s what’s going on here with Amazon so while my p/e ratio of 184 seems to be sky-high it’s kind of out of touch because you have to understand this is how Amazon intentionally operate their business now the forward p/e is 73 so that’s a little bit more realistic but again that’s based on perceived future earnings from Wall Street estimates so that’s not anything you can bank on now stocks like Amazon Facebook Google and Apple are at all-time highs right now you know in most cases you know you’d say you don’t want to invest in a stock but it’s all the way up however despite the stock being sky-high investors are bullish and short positions are miniscule so even though the stock is at all-time highs and I’ve talked about Apple as well in the past haven’t really touched on Facebook and Google but I see Apple and I see Amazon as great investments right now so why do I see Amazon as a buy I think I have six reasons total over the first two right now number one is the fact that online retail sales will double by the year 2020 so this was kind of shocking to me you think of Amazon at this huge player out there but the reality is that ninety one point seven percent of US retail sales are conducted off line which is crazy to me because I would have thought it would be a lot more but ecommerce is still less than 10% of all the retail sales that are going on so there’s still a large amount of room for them to grow now eMarketer estimates that global retail e-commerce sales will increase to more than four trillion in 2020 up from under two trillion in 2016 so from 2016 to the end of 2020 basically that figure is going to double which is a very significant movement for that so we are seeing a mega trend right now a consumer shopping trends shift and I kind of talked about this in my video I did on the retail meltdown that’s going on right now and if you guys want to see that video I’ll link up to it at the end but basically talking about how retail is just getting destroyed right now while companies like Amazon are doing phenomenally and a lot of that has to do with a trend shift that’s going on with the consumer shopping habits but basically of all the companies out there I mean Amazon will benefit from this trend shift more than any other company so seeing more people spending money through e-commerce than offline retail is a big plus for Amazon number two is the fact that Amazon is actually becoming the shopping search engine what I mean by this is bloom reach found that 55% of consumers begin shopping related searches on Amazon and this is up from 44% the previous year so it’s up basically 144 to 55% so 11% more people are now beginning their searches on Amazon so instead of going to Google and let’s say you’re buying a blue shirt or something like that instead of going to Google and saying blue shirt they’re actually starting their search on Amazon which is really interesting it doesn’t mean that people are beginning to associate Amazon as the shopping search engine more so than they are Google which we see here shopping related searches on Google felting 34% to 28% in that same time frame so what we are seeing here is a rapid paradigm shift where people are now associated Amazon as big shopping search engine which is a huge plus for Amazon which means that they’re just going to be getting more and more business over time now shopping related searches on all of the retailer sites fell from 21 to 16% as well so it’s very clear that all this search traffic went to Amazon instead okay so the third reason is I think Amazon stock is a buy is basically it has to do with the way Amazon rates and what their business model is and Amazon basically stands to disrupt industries that aren’t serving customers as well as they could be so Amazon is simply better at retail they’re cheaper they’re working on being faster and they have a better selection no longer do you have to go to a store and worry about over they have one I need their and they’re just doing everything they can to serve the consumer and the customers the best way possible and this can be seen even an Amazon mission statement which is we seek to be earth’s most customer centric company and many of us would agree this is exactly what Amazon is it’s very convenient for us and personally I use Amazon almost exclusively for my shopping and I I’ve never been groceries I do buy groceries at the store but they’re even in a position where they’re starting to plan out or they’re working on disrupting grocery stores as well so basically Amazon is disrupting traditional businesses left and right particularly the ones that are not serving customers in the best ways possible so just a couple of examples of this is they’re now getting into groceries and selling groceries and also the original video content and what’s amazing to me is that they are actually spending more than HBO on original video content so this just goes to show when some people wonder why they’re you know breaking even basically with their business it’s because they’re pumping so much money into what they already have to be to give the customers and the consumers the best possible experience so the fact that Amazon is spending more money on original video content that HBO is incredible to me and they’re also even beginning to disrupt delivery services so FedEx UPS they may want to watch out what Amazon has up their sleeve number four is the fact that Amazon is still founder led so Jeff Bezos founded Amazon back in 1994 embezzles holds roughly 83 million shares of Amazon or 18% outstanding shares of what Amazon has out there so a bezel is heavily invested in success of his company and founder led companies tend to be more innovative and financially successful so that’s also a big plus for Amazon right there number five is the fact that Amazon has a low risk of disruption a very low risk of disruption that is because Amazon has intellectual property network of fulfillment centers worth billions of dollars and who could really afford all the infrastructure as well as the money that we need to go into all these behind the scenes stuff that goes on with Amazon to even come close to disrupting Amazon’s business the only one that comes to mind is Walmart and I know Walmart is competitive with Amazon but I don’t think I don’t see Walmart being on part of what Amazon has to offer especially because Amazon is involved in so many different areas now unless Walmart goes out and starts making a Walmart video service where they’re offering streaming services which is just something I don’t see them doing so maybe with the online shopping Walmart does have a slight copy of competitive edge with Amazon maybe they are competing but I know personally I’ve never purchased anything from Walmart and I mean either them in the store I buy stuff in the store but I’ve never purchased anything from Walmart online but I’m curious is that something you guys do again a lot of people have mentioned that Walmart is in some ways competitive with Amazon as far as online shopping and e-commerce goes but basically you guys amazon fulfillment centers are cost me assets and Amazon has 82 fulfillment centers already with 31 more plans so the more facility sectors they have that will result in faster shipping as well as lower prices and the faster shipping and lower prices make them more competitive so unless somebody has billions of dollars kicking around and they’re looking to go go ahead to have with Amazon there’s a very low risk for them being disrupted or knocked off this pesto they have right now number six is a big one too and there’s a lot of reasons why Amazon Prime is awesome for Amazon but I’m just going to give the main reason that I see so nearly half of all US households have an Amazon Prime account now and I even read somewhere now that an Amazon Prime account is not more common in a household than a landline telephone services which is crazy to me to see how fast that trend shifted so this $99 annual membership in a big win for Amazon so why do I think Amazon Prime makes amethyst occupy that is because Amazon Prime makes many consumers exclusive to amazon including myself so I have an Amazon Prime account and if I can find on Amazon I do the reason is I want to get the best bang for my buck so you obviously get that free shipping available and so for me it makes sense to use that to get the best bang for my buck so if I can order something from Amazon and it’s a little bit less money than what I might pay at Walmart or Best Buy something like that I will absolutely order from Amazon because I’m getting the free shipping and that way I’m getting the best bang for my buck because I’m paying for that service anyway I might as well use it and that is huge for Amazon because it makes customers and consumers exclusive to amazon stores of shopping goes anyway guys those are the reasons that I see Amazon stock as a buy right now and like I said this is just my opinion so it’s not a fact that all the stock is going to go up but based on these facts and many other reasons I 100% see Amazon stock as a buy personally I’m not invested in Amazon right now as a lot of you know I’m heavily invested in AMD but it’s something that I’m going to keep an eye on in the future and I would love to hold Amazon if I had the money kicking around right now I would absolutely have some money in Amazon stock but anyways guys that’s pretty much all I got for this video if you enjoyed it please drop a like and if you’re new to the channel please subscribe as well to be notified of any future uploads and if you guys want me to talk about any other companies I know I have a lot of people who personally ask me like my opinion on a certain stock a lot of the times I have you guys asking me about small cap or penny stocks and I really don’t talk about that on this channel so for me it only makes sense to make a video about a stock or a company that a lot of people are talking about so if you have any big companies that you guys want me to talk about I definitely plan on talking about Facebook and Google as well but if there’s any other ones that you guys would like to see please drop me a comment below and also let me know what your opinion is of Amazon stock as well but that’s pretty much all I got for this video I thank you guys for watching you