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Friday, December 2, 2022

Amazon Stock Predictions: What You Need to Know About AMZN’s Future

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When it comes to predicting the future, it’s a fool’s errand. Every stock has its own set of challenges, risks and opportunities. Amazon has seen its fair share of ups and downs since its original IPO in 1997, and it is at the moment one of the best stocks to buy now. Investors have grown cautious over the last few years, but it’s time to get back in the game. Here’s everything you need to know about Amazon’s future.

How has Amazon’s stock performed in recent years?

In the last couple of years, Amazon’s stock value has fluctuated wildly. It peaked at $1,973 per share in June 2018, and then plunged to a low of $859 in January 2019. The stock recovered slightly to $1,071 in March, but dropped again in April. That’s a 73% decline from June 2018 to April 2019.  Amazon’s stock performance in recent years is a symptom of the broader market decline that occurred from January 2018 to April 2019. That decline was driven by a confluence of factors, including rising interest rates, a slowing economy, and rising political tensions across the globe. This decline, and the subsequent recovery, is why we’re speculating stocks will peak and decline again.

Amazon’s stock predictions for 2025

Amazon’s stock is expected to rise through 2025, but that won’t be a particularly dramatic increase. We expect the stock to reach $1,100 by the end of the year. That’s a gain of 18% from the current price, and almost exactly what the stock did in its initial public offering in 1997.  Amazon’s 2025 revenue is expected to reach $99 billion. That’s up 18% from 2019 revenue but down 9% from the company’s peak revenue in 2018. Amazon’s 2025 profit is expected to total $3.13 billion, up 36% from 2019 but down 26% from the company’s peak profit in 2018.

How will Amazon’s revenue and profit grow in the future?

Amazon has diversified its revenue sources and is no longer solely dependent on its core retail business. The company has expanded its revenue mix from 74% in 2018 to 77% in 2019 to 81% in 2025. It has diversified its revenue sources by increasing its non-retail revenue share from 11% to 22% in 2019 and its non-retail profit share from 6% to 12% in 2019. Clearly, Amazon is diversifying its revenue and profit sources, and we expect it to continue expanding its non-retail revenue share over time.  Amazon’s profit is expected to grow each year, but not as dramatically as revenue. The company’s profit is expected to grow by 36% in 2025, up from 24% in 2019, but by 26% in 2021. Thereafter, Amazon’s profit is expected to grow by 24% in 2022, 20% in 2023, 19% in 2024, 18% in 2025 and 17% in 2026. Amazon’s profit is expected to decline slightly in 2027. In comparison the Nasdaq has grown only by 25% in the last 2 years, and the Dow Jones today reached 30% growth in the last 3 years.

Which industries will Amazon destroy?

We see potential for Amazon to disrupt certain industries in the coming years. One sector that could potentially be disrupted is apparel retail. Amazon has long been a player in this space, but it could dominate the space much further with its Amazon Fashion service. Amazon’s apparel retail revenue is expected to reach $8 billion by 2021.

Bottom line

Amazon has faced challenges over the last few years, but it’s time for investors to get back in the game. Amazon stock forecast sees a peak in 2025 in terms of profit growth. That’s a great opportunity to add to your Amazon stock position if you missed out on the hype of 2018.

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