Amazon Stock Price Prediction 2023-2027

Amazon Stock Price Prediction: Latest Stock Price

Article Coverage: Performance Summary, Latest Amazon Stock News, Analyst Forecast, Q1 Results Summary, Industry and Company analysis, Fundamental analysis

Amazon Stock Performance Last 12 Months

• Last 5 Days: –10.9%
• Last 1 Month: -4.3%
• Last 6 Months: +31.9%
• Last 12 Months: +5.6%

Latest Amazon Stock News

• Amazon has decided to cancel its plan to charge merchants who don’t use its shipping services an extra fee. They were going to impose a 2% fee on sales by third-party sellers who handle their own shipping, starting on October 1st. This move seems to be a cautious response to increasing antitrust scrutiny, as Amazon aims to avoid potential complications and costs associated with the fee.

Amazon Stock Price Prediction 2023

AMZN Price Target 2023	$175
Wells Fargo	$165
Morgan Stanley	$175
Wedbush	$180
Deutsche Bank	$175
Wolfe Research	$180

Amazon Stock Price Predictions 2023 to 2027 (Aggregated)

• Amazon Stock Price Prediction 2023 is $150
• Amazon Stock Price Prediction 2024 is $192
• Amazon Stock Price Prediction 2025 is $219
• Amazon Stock Price Prediction 2026 is $237
• Amazon Stock Price Prediction 2027 is $266

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Amazon Quarterly Results

Last Quarter (Q2 of 2023)

Amazon released its Earning for the Q2 of 2023 and to a surprise, Amazon registered its biggest Earning gains since the 4th quarter of 2020. Here is a brief summary of Amazon’s Q2 2023 earnings:

Amazon in Q2 registered an EPS of $0.65 while the expectation was just around $0.34. This was a massive 89.54% more than the expectation. Overall Amazns’ EPS was up 425% YoY.

Revenue saw a marginal increase of 2.32% from its expected number. Amazon’s revenue for Q2 of 2023 was $138.34 B while the expected revenue target was $131.34 B. Revenue rose 10.85% YoY.

The company reported net sales of $134.4 billion for the second quarter of 2023, up 11% from the same period a year ago.

Amazon did really well in the second quarter because its cloud computing and advertising businesses grew a lot. AWS revenue grew 12% year-over-year to $22.1 billion, and advertising revenue jumped 22% to $10.68 billion.

The company made a profit of $6.7 billion, which is like 65 cents for each share. Last year, they lost $2 billion, which is 20 cents per share.

Q3 2023 Guidance:

Amazon’s guidance for the third quarter is also positive. In the next three months, Amazon predicts that it will make around $138 billion to $143 billion in revenue. This would be a growth of about 9% to 13% compared to the same time last year. The operating income is expected to be between $5.5 billion and $8.5 billion, which is much higher than the $2.5 billion they made in the same period last year.

Amazon Stock Price Prediction: Will Amazon Stock Go Up in 2023?

To understand if Amazon will recover and go up, we must first understand the various ratios determining the performance of the company from its previous data. Here is how Amazon performed on different ratios:

• PE Ratio – 103.6
• Price to cashflow – 22.03
• Price to Book Value – 7.97
• EV/EBITDA – 21.3
• Return on Capital Employed – 4.64%

PE Ratio: This ratio compares a company’s share price to its earnings per share. The average PE of Amazon from 2015 comes to around 156 which means that Amazon is undervalued in its own rights at the moment. The industry average PE is also around 150. 

Price to cash flow: It compares a company’s market value to its operating cash flow and the lower it is, the more undervalued a stock is. Looking at the historical ratios, we can say that Amazon is fairly able to maintain an average of 25 since 2015 which means that it is not that undervalued at the moment. Last year it was 37, so one can say that if compared to that, it is undervalued right now.

Price to Book Value: It is used to compare a firm’s market capitalization to its book value. P/B ratios under 1 are the ones that attract most of the value investors. If compared to how it was for Amazon over the years, it has halved in value and this is a good sign for investors as the books and assets of the company are getting corrected.

EV/EBITDA: This measure is used to determine the value of a company. The best use of this ratio happens when it is compared with the industry average. It values the company, debt included, to the company’s cash earnings less non-cash expenses. Amazon.com’s EV / EBITDA for fiscal years ending December 2017 to 2021 averaged 33.8x.  Amazon.com’s operated at a median EV / EBITDA of 29.2x from the fiscal years ending December 2017 to 2021.

Return on Capital Employed: This percentage is used to check the company’s capital efficiency and profitability. It can simply be interpreted as a higher value means higher the company’s profitability. In this case, Amazon is at a low of what it was in 2017. It had maintained an average of 9.2% since 2015 and that’s a bit concerning to see the return fall below 5%. Looking at these numbers, Amazon looks very much undervalued right now and can be a good buy.

Considering all the ratios, Amazon is undervalued right now and it is a good buy for long-term investment.

Will Amazon reach 1000?

Factors Affecting the e-Commerce Industry

Growth of Mobile Commerce: Mobile commerce is also on the rise, as more consumers use their smartphones and tablets to shop online. Retailers are increasingly investing in mobile-friendly websites and mobile apps to cater to this growing trend.

Personalization: Consumers now expect personalized experiences when shopping online, with tailored recommendations and relevant content. E-commerce companies are leveraging data analytics and artificial intelligence to provide personalized experiences that improve customer satisfaction and increase sales.

Apart from e-commerce domination, Amazon is the leading giant in the world of cloud computing. Amazon’s AWS competes with Google’s Azure.

Read: Tesla Stock Forecast 2023

Amazon Stock Price Prediction: Global Macro

The amount of retail e-commerce sold globally increased steadily by 10.1%. This increase in share was significantly affected by Asia-Pacific, where e-commerce accounted for 14.6% of all retail spending. E-commerce made up less than 5% of retail sales in Central and Eastern Europe and several of Southeast Asia’s developing digital markets. The same held true for areas like Latin America as well as the Middle East & Africa where economic concerns had delayed the growth of e-commerce sales.

The rise in smartphone sales has made it easier to access the internet, and this ease of use has increased the use of debit cards for purchases as well as investments in transportation and warehouses. The expansion made to cover target customers from other regions aside from domestic customers through various means, such as partnerships with any international company, and many more are expected to boost the growth of the sales and the market. Many organizations have focused on scaling up order fulfillment systems and providing proper responses.

Amzn Stock Price Prediction 2023: Bull Case

• Profitable Cloud Business: – It is true that Amazon’s major revenue comes from e-commerce business, but the cloud business (Amazon Web Services) is quickly catching everyone’s attention and is becoming the most profitable one for Amazon Inc. AWS revenue in 2021 at $62.2 billion – an increase of 37% YoY. It could soon become a $100 billion revenue stream.
• New Partnerships with Rivian, Meta, and Other Companies– What builds confidence in AWS is its new line of customers which includes Rivian, Under Armour, Goldman Sachs, Meta Platforms, and many other such marquee customers. It speaks volumes of demand for cloud-based business and AWS is giving tough competition to Google. AWS generated an $18.5 billion operating profit in 2021, an impressive 37% increase YoY. The positive reaction can be seen after the Q2 earnings reports were out, as many analysts increased their price targets and also gave a ‘buy’ rating.
• Advertising Sector – The next gem in the making is the advertising sector for Amazon. Amazon for the first time split up advertising revenue in the latest quarter earnings. It reported $9.7 billion in revenue in the fourth quarter, an increase of 33% YoY. Amazon provides advertising services to wide segments of customers including sellers, suppliers, customers, etc. Live sporting events can add significantly to the revenue in coming years as Amazon has recently done an 11-year agreement with the NFL to telecast Thursday Night Football.

Amazon Stock Price Prediction 2030: Bear Case

• Persistent Labour Issues- Recently Retail, Wholesale, and Department Store Union (RWDSU) accused Amazon of interfering illegally in a union election in Alabama. It is alleged that Amazon officials have removed union literature from its break room and limited access. It may be true or false, but the fact is that these unfair treatment accusations against Amazon are not new and it appears that Amazon is trying to hinder unionization rather than improving relations with labor. It could hurt Amazon’s business in the future.
• Lower Operating Margins in E-Commerce Business- Amazon’s e-commerce business reported $407 billion in revenue for the 2021 calendar year. But, despite good top-line growth operating margin has decreased YoY. In North America, the operating margin was 3%, representing a 1% decline from 2020. The international segment reported an operating loss margin of negative 1% in 2021, compared to a 1% positive in the year prior. This decline in operating profit was due to labor supply issues and supply chain disruptions. These are expected to continue in 2022.
• Declining Cash Flow – As a matter of fact, Amazon’s trailing 12-month cash flow decreased 30% YoY to $46.3 billion and free cash flow has come to a negative $9.1 billion for the past 2 months ended 31 December 2021. Free cash flow was positive at $31.0 billion for the trailing 12- months ended 31 December 2020.

Factors to look out for in 2023

• AWS and ad Revenue are the bright spots – In the recent quarterly dull results, it is the AWS sector and ad revenue that stands out. One of the key growth drivers of AWS- the cloud computing segment sales jumped 27% to $20.53 billion and the segment’s operating income increased 11% to $5.4 billion. Although AWS is used to growing at more than 30% in each quarter, 27% growth is also worth mentioning.

Its other sector is digital advertising which is the third largest ad platform only behind Google and Facebook. In the recent results, advertising revenue jumped 25% to $9.54 billion, approaching the $40 billion annual sales target. Although Amazon does not report the operating income for advertising, it is close to 30% as observed from peers like Google and Facebook. 

So, while e-commerce sales can be a bit sloppy in 2023, it will be AWS and ad revenue that can give Amazon an extra edge. These sectors should be looked out for separately in 2023.

• The meaningful acquisitions – Amazon has been on an acquisition spree since 1999. Today, one of the most loved digital gadgets Alexa was bought by Amazon as Alexa’s internet business in 1999 for a too small amount to be disclosed. Alexa was nothing back then, but now it is an important artificial intelligence system connecting Amazon’s smart home and personal assistant devices. 

Over the years, Amazon has made many more such acquisitions. But for 2023, there are two that are worth mentioning. The first is a $3.9 billion buyout of One Medical, which can give Amazon wings to enter the healthcare sector. It is a primary care service with a presence in over 200 locations and 24/7 access to virtual care. 

Second, was the acquisition of Whole Foods in 2018. The $13.7 billion buyout added 472 physical stores to Amazon’s all-digital sales model.  Although it accounted for 3.6% of total Amazon sales last year, the chain is evolving quickly as we discuss Amazon shares. 

For 2023, to be the year for Amazon Inc, one of its acquisitions, either One Medical, Whole Foods, or Roomba maker iRobot has to click and significantly to its revenue and profitability.

• Everything Boils Down to Valuation – Valuations are very important in this high-inflation market, where investors are dumping “highly valued growth stocks”. For Amazon, the current dip in the stock price has cooled off its valuations to a large extent. The TTM price-to-sales ratio is only 2.5 which has come down from highs of 4.30 and 3.65 in 2020 and 2021 respectively. This is one of the lowest in the past six years. 

Moreover, AWS and ad revenue are key strengths of Amazon which will not allow the sales to go down in 2023. The price-to-earnings ratio of 82 looks a bit high on the surface, but it had the same EPS in 2020 and 2021. Also, it is due to dropping earnings per share from 3.30 in 2021 to 1.11 in 2022. It is likely to move upside down in 2023, and hence valuations will be further down.

Amazon Stock Price Prediction 2025: Valuations

While Amazon’s predicted earnings for FY 2023 are 1.82, the EPS trend is on the great upside, thus estimates may continue to rise. Shares of AMZN are currently trading at a P/E ratio of 89x based on the forecast EPS of 1.82. This is pointing out the fact that Amazon is only going to increase heavily in its earnings in the coming time. This translates to a PE of 51.2. Depending on how harsh the recession will be, Amazon will find a way to keep its earnings on track.

The earnings forecast and future cash flows are very highly valued. From the PE valuation point, it looks overvalued but it has always been the case with Amazon. The industry average of PE is 150 with the retail sector average of 32. So, all in all, Amazon is fairly valued now with a good opportunity to buy if one is to look at their predicted earnings for the coming years.

Amazon Stock Forecast 2023: Conclusion 

As we know the global environment of high inflation and economic woes is temporary. Therefore, to conclude, Amazon has weathered the difficulties maturely and is poised to grow better in 2023. For example, the company is working on a stronger cost structure which is a big plus for the long term. Also, Amazon is attracting more and more customers towards Prime subscriptions through NFL Thursday Night Football Premier and many other such shows. 

Most importantly, Amazon Inc. has diversity in its business. Apart from being its moat in E-commerce, AWS is its growth engine and ad revenue has just started to gain the spotlight. Hence, it is important to believe in the business model of Amazon. Additionally, the recent dip presents a good opportunity for investors to add it to their portfolio for 2023. 

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.