Amazon Stock: Is It a Good Buy Right Now?

Las Vegas,Nevada, United States - June 18, 2020: Amazon fulfillment center exterior shot in North Las Vegas Nevada USA .
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Amazon (Nasdaq: AMZN) stock has been on an upward trajectory since day one, and there seems to be no end in sight. But with shares currently trading at over $3,400 each, it’s a significant investment. Here’s what you need to know about whether Amazon stock is a good buy right now.

Results for 3rd Quarter 2021

Amazon announced its results for third quarter 2021 after hours on Oct. 28. Although revenue grew 15%, that figure was 37% below revenue growth in Q3 2020 — not surprising, as the increase in revenue in 2020 was primarily due to the coronavirus pandemic and the fact that online sales increased significantly as people chose not to shop in stores. In its Q2 earnings report, Amazon warned that growth was likely to continue to slow in the coming quarters as shoppers return to brick-and-mortar stores.

The company reported that it earned $6.12 per share in Q3. Revenue came in at $110.8 billion.

Earnings and Revenue Missed Estimates

Before a company releases its quarterly earnings, the analysts who follow that company, and others in the same industry, estimate what they think the company will report for revenue, earnings per share and other metrics. These estimates are known as “consensus estimates.”

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In the third quarter of 2021, Amazon’s earnings per share was $6.12, which was well below the consensus estimate of $8.92, as reported by CNBC. This means the company earned less per outstanding share of stock than the analysts thought it would.

Third-quarter revenues also missed the mark. The company was expected to announce revenues of $111.6 billion, but instead, announced $110.81 billion.

Good To Know

For the first time in its history, Amazon earned more revenue from services like Amazon Web Services (AWS) and Amazon Prime subscriptions than from retail sales, CNBC reported after the third-quarter 2021 earnings release.

Expectations for the 4th Quarter

In its guidance for the fourth quarter of 2021, Amazon reported that it expects net sales to grow between $130 billion and $140 billion, representing a 4% to 12% increase compared to the same quarter last year. The earnings report noted that the guidance reflects the company’s estimates on how the COVID-19 pandemic will impact operations.

The fourth quarter will be an expensive one for Amazon. The company is expanding shipping ports and transportation fleets in response to supply chain bottlenecks wreaking havoc on logistics as the holiday shopping season begins. CEO Andy Jassy said those efforts as well as inflation and higher labor and shipping costs will result in “several billion dollars” of extra costs, reported CNBC.

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Is Amazon Stock a Good Buy?

 Investors who bought Amazon in the past have done very well, but if the past year and a half has taught investors anything, it’s that anything can happen, and you may not see it coming.

What the Analysts Say

According to Yahoo Finance, of 47 analysts following Amazon stock as of Oct. 28, 15 rated it a “strong buy,” 28 rated it a “buy,” three rated it a “hold” and one gave it a rating of “underperform.” None of the analysts recommended selling it. This gives Amazon stock an average rating of 1.7 on a scale of 1 (strong buy) to 5 (sell).

The price of the stock at closing on Oct. 28 was $3,446.57. This is lower than any of the analysts’ price targets, which range from a low of $3,775 to a high of $5,000.

What You Need To Consider

Analysts who follow technology stocks have high expectations for Amazon, and the e-commerce juggernaut still appears to be unstoppable. But investors who are thinking of getting into Amazon stock now need to understand that they won’t see the growth rates the company saw early on, or even in the recent past. If you decide to get in now, it should be with the intention to hold the stock for the long term.

Finally, when considering whether to buy Amazon, look at the rest of your portfolio. Tech stocks have been on the rise lately, so they may represent a larger share of your portfolio than you may be comfortable with. Make sure you have a good mix of stocks by market capitalization, sector and growth vs. value orientation.

Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Oct. 28, 2021, and subject to change.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the Author

Karen Doyle is a personal finance writer with over 20 years’ experience writing about investments, money management and financial planning. Her work has appeared on numerous news and finance websites including GOBankingRates, Yahoo! Finance, MSN, USA Today, CNBC, Equifax.com, and more.

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