Amazon Share Forecast January 2022 – Time to Buy AMZN?

Shares of online retail giant Amazon (NASDAQ: AMZN) are in the red today, after closing at $3251.08as of January 7^th (19:59 EST). Pandemic-related gains drove a stunning 76% surge in Amazon’s share price in 2020. The shares then treaded water last year on overblown fears that its growth could slow.

Amazon – Technical Analysis

Amazon’s financial statement indicates a market cap of $1.649 trillion with total assets worth $382.406 billion. Revenue for 2020 was at $386.06 billion with a profit margin of 5.53% compared to $280.52 billion in 2019.

Moving averages such as Exponential Moving Average (10)(3330.82),  Simple Moving Average (10)(3345.97), Exponential Moving Average (20)(3370.70),  Simple Moving Average (20)(3375.66) and Exponential Moving Average (30)(3392.48) are indicating a sell action. Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(0.00), Williams Percent Range (14)(−94.40), Bull Bear Power(−145.28) and Ultimate Oscillator (7, 14, 28)(36.04) are neutral.

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Recent Developments

Amazon has been a growing business for quite some time and the pandemic provided it with a booster dose of growth. As Hundreds of millions of people turned to the e-commerce retailer to deliver the goods they needed and wanted, they turned to Amazon. This translated to a surge in revenue by 37% in 2020 which means a revenue increase of over $105 billion from the year before. Even as economies are well on their way to reopening, the company has sustained and even expanded on the higher level of sales.

Sales at Amazon increased by 28% in the nine months ended Sept. 30, compared to the same period the year before. It also grew operating income by $5.4 billion to reach $21.4 billion in the same nine months ended Sept. 30. Amazon has maintained operating cash flow which has remained at over $50 billion for six consecutive quarters. It thus has a lot of funds to invest back into its business, adding fulfilment centres, delivery trucks, cargo planes, and staff members which is precisely what they did in the most recent 12 months.

The company has kept its investors happy by increasing its return on invested capital from 2.3% to 14.1% from 2015 to 2020. It has invested $52 billion in purchases of property and equipment in the last 12 months. The business is now at the strongest it has been in a while with millions of new customers added since the pandemic onset, billions more in revenue and profits, and a fresh $50 billion investment.

Should You Buy AMZN Shares?

Amazon has become a powerful force in the advertising industry due to its leading presence in e-commerce. This has also allowed the company to gain market share from the likes of Alphabet’s Google and Meta Platforms’ Facebook. Various analysts estimate that the U.S. digital ad market will almost double to more than $270 billion by 2023 from $153 billion in 2020. They have also predicted Amazon’s shares to rise from 10.3% to 14.6% during this time. This is due to the company’s third-party merchants enjoying higher returns on their marketing investments by advertising directly on its e-commerce platform.

Another reason for investors to be optimistic about Amazon is its cloud computing business. In the third quarter alone, AWS climbed 39% and it also makes up more than half of the company’s operating income. Amazon plans to open 24 more availability zones and eight additional AWS regions on top of the 81 availability zones through 25 regions globally. So despite the current rough patch, you can easily add Amazon shares to your portfolio for the long term.

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