- May 31, 2019
- Posted by: Marshall
- Category: Investing
Last Updated on
Amazon is the largest online retailer. Amazon was started by Jeff Bezos in 1994. Its very likely that that you purchased something from their website, or shopped at a Whole Foods which they also own, or even seen one of their delivery Amazon is everywhere and it’s understandable that you would want to invest in something that you know and use.
Investing in Amazon
Amazon went public in 1994 at a price of $18. If you invested $100 when it went public, you would of received 5 shares. By the end of 1999, those 5 shares turned into 60 shares because of stock splits. The first one was a 2 for 1 stock split, that would of gave you 10 shares. The next one in 1999 was 3 for 1, those 10 shares turned into 30 shares in Amazon. The last one in 1999 was 2 for 1, and those 30 shares would turned into 60 shares. Those 60 shares in Amazon would be worth $109,380 at the end of May. Yes, a $100 investment in Amazon would be worth over $100,000. One thing to remember though is that you would have had to hold your shares for 25 years and the past 25 years have been pretty rocky investment wise.
Should you expect a similar performance going forward?
No, for a couple reasons, you should never expect previous investment performance to continue. So while Amazon may continue to increase in value, the return rate may not be the same. Additionally, As Amazon approaches a $1 Trillion dollar market valuations, the law of large numbers takes hold. Meaning that its easier for a company to increase their value of the company from $1 billion to $2 billion then it is from $100 Billion to $200 Billion, and more definitely so from $1 Trillion to $2 Trillion.
Do your research
Before you make any investment, you should do some research. Understand the risk associated with purchasing the stock. Try not to let past performance factor into your decision. See if the stock fits into your portfolio. This should be done not only when considering purchasing Amazon’s stock, but any investment. You also may want to get another opinion and consult with an investment advisor.
Selecting an Investment amount
Select an amount that you would like to invest in Amazon’s stock. Currently the stock is trading around $1900, so you will need to factor that in as well. A 100 Shares of Amazon would cost you $190,000. Therefore you need to select an investment amount that you are comfortable with.
Since you need to purchase Amazon’s stock through a broker, if you don’t have an account at a brokerage firm you will need to open one up. In order to buy Amazon’s stock you will need to place an order through an broker. If you currently don’t have an broker you are using, we suggest Ally Invest. They provide a great service at a great price.
If your opening a new brokerage account, you have to figure out what type of account you want to open. You can either go with a personal investment account or a retirement account, if your eligible. There are different tax consequences with each account, so you need to be aware of that.
Once you have an account broker account setup and funded, and are ready to place an order, you first have to figure out how much of the stock you want to buy. Amazon is trading around $1900, so you have to take that into consideration as well. If you are not able to purchase a full share you may want to see if your broker allows fractional share purchases. Some do, some don’t.
Placing your Order
Once you decided on the amount to investment, the next part is deciding if you want to place a limit or market order. A market order purchases the stock at the current market ask price, which is great if you want to get the stock right away. A limit order executes your order at the price you enter, which is great if you are more concerned about your entry price then you are about getting the order filled right away.
Why does it matter?
On stocks that have wide spreads, placing a market order can result in paying more for a stock then you had wanted.
- Can you buy amazon’s stock directly – Unfortunately, at this time you can not buy Amazon’s stock directly from the company. In order to buy Amazon’s stock you will need to place an order to do so through an investment/trading broker.
Amazon stock price
Amazon’s stock has traded from a low of $1307 to a high of $2050 over the past 52 weeks. The current stock price is $1823 as of May 26, 2019.
Will Amazon stock split in 2019
With Amazon’s stock price approaching $2000 as of May 2019, many people are wondering if the company will split their stock. The answer to that question is that only Amazon knows, our take is that it is highly unlikely. However, it wouldn’t be unprecedented either. Amazon previously split their stock 3 times, once in 1998 and twice in 1999, which was during the dot com bubble days. It has not had a stock split since then. Our take is that if they were going to split their stock it likely would have been done when the stock was around $1000, so we don’t think its very likely to happen in 2019.
Does Amazon Pay a Dividend?
At this time, Amazon does not pay a dividend for its shareholders. Amazon has decided to use its profits to continue investing in its company. They are don’t purchase back their stock like other companies. Any appreciation in the value of the stock will come directly from the market and company appreciation.
Outlook on Amazon’s stock
According to TipRanks, Amazon has 34 analyst following the company. They all rate Amazon as a buy. They have a 12 month price target of $1935 to $2,550. Which would be a return of 38.8% on the high end from today’s prices. Again, before purchasing Amazon, we highly suggest that you do your own research and even consult a professional investment advisors.