Expecting the Prices to Surge: The Best Time for AMAZON Shares

Three months ago, Amazon shares enjoyed their historical peak and were worth $2000. Today, the rate dropped by 15% and mass media are certain: the price will keep dropping. Analytics see three underlying reasons:

  1. Amazon’s investors are not happy with how the shares grow.
  2. The company is not developing technologies and is focused on sales.
  3. Amazon’s clients are lured by competitors.

Let’s consider the points one by one:

Investors are not happy with growth of shares

Amazon’s Income statement was published at the end of July. The company has spent $800 million for a one-day delivery project, Amazon Prime:

Amazon Prime’s one-day delivery within the USA

What investors didn’t like about the Income statement was that nearly one billion dollars has been spent by Amazon on delivery, while share prices have made only $5 increase.

Another reason why investors sell their shares is that the company gets stuck on sales and does not promote cloud services development.

Amazon’s ace of trumps is Amazon Web Services, a technology mix for businesses. Shareholders believe that since Amazon has no competitors in this domain, it must invest into AWS instead of retail sales.

Amazon Web Services: technologies for growing businesses

The third reason for share prices to drop is that Amazon is pressured by its competitors. The company is still a leader in cloud technologies, but in retail sales it has two strong competitors: Walmart and Target.

These two companies use different methods to lure Amazon’s clients:

  • Walmart intends to offer one-day delivery just like Amazon. If it works out, part of Amazon’s clients will move to Walmart.
  • Another strategy is featured by yet another Amazon’s competitor, Target: it announced super low prices for school items, and the discounts attracted part of Amazon’s potential customers making them leave for Target.


Target and Walmart chains of hypermarkets are Amazon’s major competitors

Poor sales and pressure from competitors resulted in Amazon’s shares continuously dropping for the entire previous month:

But one must understand that dissatisfied investors selling their shares is a temporary thing. At a bullish market, a time-frame of one or two months is just a correction period which can be used to “stock up at a cheap rate”. What we need to figure out is: when and at what price this should be done.
To do this, why don’t we examine Amazon’s business: what the company spends money for and what is to be expected of it. As we find this out, we’ll realize whether the company is worth investing into.

“Pro” Amazon: The Reasons Why the Shares May Grow

The simplest way to examine Amazon’s business is to have a look at a weekly timeframe chart of its shares:

Amazon’s shares have been growing for as long as the company exists

The trend is upward, meaning that Amazon’s business is growing. This is a clear sign for us as investors: the time to buy shares is during pullbacks, when the price drops.

But before we start looking for the best pullback price, let’s make sure that the company does whatever investors are expecting of it:

Happy investors buy shares which makes the share prices grow.

An upward weekly chart is the first reason why people invest into Amazon. Just to be dead sure let’s find out whether Amazon’s business is growing. If it is, investors are gonna spend their money and buy shares. If so, that’s what we’ll also do.

Amazon is expanding: new markets are being captured

The company is different from its competitors: it spends a lot of money to buy other companies.

  • Amazon has bought a chain of hypermarkets called Whole Foods Market. WFS is a leading company in selling organic foods in the USA. The amount of money Amazon has spent to buy WFS was $13.5 million.

Whole Foods Market is a leader of organic foods in the USA. Now the company is a part of Amazon’s business

  • Amazon is a major competitor of Netflix. For the first quarter, Amazon already invested over 1.5 billion US dollars into Amazon Prime, its own video streaming service, and is planning to further invest as much as $5.5 billion by the end of the year.

Amazon wants to win in a video streaming racing

  • Amazon is a leader in the market of smart speakers: Alexa is a choice of every third buyer of loudspeakers in the USA. By 2021, net profit from sales of Alexa may reach $19 billion, which is 5% of the entire Amazon’s income.

Amazon is investing into making Alexa smarter: the number of the speaker’s smart skills has reached 80.000, according to Techcrunch

Amazon “campaigning” for health

Amazon is going to make a revolution in medicine. For this purpose, the company has bought Pillpack, a giant pharmaceutical online-company. Pillpack cost Amazon as much as a billion dollars.
Currently, Amazon is getting ready for the launch of Amazon Care, a service to relieve customers from a necessity to visit appointments with doctors. People will be able to get medical care without leaving their home:

Amazon Care is online medical advice service. Amazon is going to have its own pills too: the company bought Pillpack for a purpose, you know.

As we can see, Amazon is investing everywhere. This is another reason for the shares to grow:

Amazon’s profit has become 15 times larger

The company spends a lot and earns increasingly more every year:

For the 3 years, Amazon proceeds have become 15 times larger

Many analytics are skeptical about Amazon spending too much. But the net profit keeps growing which means that investments are paid back.

Compare it with Microsoft’s profit for the same period:

Microsoft’s profit has become 3 times larger, while that of Amazon’s has become 15 times larger

What Do These Numbers Tell Us

We are not guessing any more — we are certain: things are great at Amazon. The company is investing everywhere: into retail sales, video streaming, goods delivery and medicine. And the investments are paid back well: Amazon’s profit is growing every year.
A long-term trend of the shares is going upwards. Currently, we see a pullback, and we can buy Amazon’s shares with minimum risk involved.

The Best Price of the Trade

To make a cheap buy, let’s analyze a price on a daily timeframe chart:

We have 2 round-number levels investors would want to buy shares from: the level of $1700 and $1600. Which of them is best to choose?

Round-number levels are a psychological attraction for investors

The level of $1600 looks stronger than that of $1700: the price used to respond to it more often.

Have a look at the chart above: the last time the share cost $1600, the price used to hit this level 4 times and haven’t broken it through. After that, an upward movement began.

The same scenario may repeat as soon as the level of $1600 is tested recurrently.

Forecast for $AMZN

Looks like $1600 is the best price to buy shares. Now let’s decide when to open a trade.

When is it better to buy Amazon’s shares: in October or in November?

October is more likely to be quiet: the price will reach $1700 and then will grow a little. Then the price will continue reducing and will test the new bottom at the level of $1600:

Forecast for October & November

If the price behaves as predicted in the forecast above, it will reach $1600 in November the earliest. There is one point to keep in mind here.

3 holidays are coming in the USA at the end of November:

  • Thanksgiving Day;
  • Black Friday;
  • Cyber Monday.

Retailers offer discounts during these holidays to stimulate people spend money for shopping. These holidays are haven for Amazon, since retail sales are the company’s major business.

During these holidays Amazon will earn more, which means that the company’s shares will grow.

But remember: other investors know whatever you know. They will want to buy shares earlier than others do. So, the share price may start growing somewhat in the middle of November. To make money, you must be among the first ones to buy the shares.

How to buy Amazon’s shares

You can buy Amazon stocks CFDs at AMarkets. You are welcome to examine the trading conditions at Contracts Specification page.

For new customers, making trade will be enabled right after registration.

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How to earn money on trading shares

To make money, you don’t have to be a master. We have made a selection of materials about the market of shares designed to teach you to trade, and the financial results will show off at the first month of trading:

1. Having any doubts about Amazon? We are certain that Facebook shares will be trending: they are more profitable than shares of Twitter.
2. Which way of making money is easier: with robots or with shares? Two instructions given in the same article: we’ll teach you how to trade shares and we’ll show how to setup your first trading robot.

Stay tuned for more news about the market with AMarkets!