You Can Trust This MegaTrend Stock, Even in Times Like These (AMZN)
AMZN Stock Proves Itself Worthy in Good and Bad Markets for Smart Investors
Amazon (NASDAQ: AMZN) founder, Jeff Bezos, was born Jeffery Jorgensen in Albuquerque, New Mexico and was raised by his mom and stepfather, Miguel Bezos, mostly in Texas and later in Florida. From an early age, he showed an extremely high level of intelligence.
Reports indicate that as a toddler, he disassembled his crib with a screwdriver. Allegedly, he did this because he wanted to feel more like he was sleeping in a grown-up bed. In high school, he was able to get a head start on his science and engineering education by attending classes at the University of Florida.
He graduated valedictorian of his class and went on to matriculate from Princeton University, where he earned bachelor’s degrees in both Electrical Engineering and Computer Science. After university, he went on to apply his computer skills on Wall Street, both in international trade and later at a hedge fund.
Jeff Bezos (source: washingtonpost.com)
Now, here comes the really impressive point in his career. He had the courage to leave a high paying job on Wall Street. After successfully climbing his way up the corporate ladder at the hedge fund D.E. Shaw, where he was probably making enough money that he could comfortably retire at an early age, he develops a fascination for the internet and turns in his notice.
He envisions an online bookstore. He decides to get almost as far away from Wall Street as one can get in the contiguous United States. He drives to Seattle. On the way, he writes up the business plan for what would eventually become Amazon.com.
The Start of Amazon
Amazon.com (NASDAQ:AMZN) was founded in 1994. He has referred to it as a “regret minimization framework” because he felt guilty for having waited so long to leave his career as a New York hedge fund manager to capitalize on the opportunities offered by the internet.
Although Bezos always had the vision that Amazon would have broad offerings, he began with books because he saw the segment as attractive to a large cross section of people. He rapidly diversified into music, CDs, DVDs, movies, computers, and much more. In fact, it didn’t take long until Amazon became like the old-fashioned general store, but on the internet.
Amazon didn’t stop there. It began experimenting with developing and manufacturing its own unique computer hardware. For example, the Kindle line of readers is a unique product in that it’s the only tablet that’s specifically engineered for reading black and white text. Of course, Amazon’s Alexa virtual assistant product is now nothing short of a piece of pop culture.
Latest Happenings at Amazon
Not surprisingly, there are still a lot of interesting things happening at Amazon, including some remarkable innovations. This past May, the company purchased filmmaker Metro Goldwyn Mayer (MGM) for $8.5 billion. MGM remains one of the most successful studios in Hollywood. It owns the rights to such film series as James Bond, Rocky, Poltergeist, The Adams Family, and many others. Now, MGM is a part of Amazon’s Prime Entertainment.
Same-day delivery using aerial drones has been a long-time goal of Amazon, and it has been developing the idea since 2013. For sure, the program has had its fair share of bumps along the way. There have been several high-profile drone crashes and internal naysayers claiming that the company puts deployment speed ahead of safety, but it continues to set-up new warehouses/drone bases in both the United States and in Europe. The latest base is planned to launch in Lockeford, California sometime this year.
One of Amazon’s latest generation delivery drones. (Source: theverge.com)
More Developments and Innovations
Amazon continues to improve the productivity of its warehouses through developing robots with ever higher degrees of autonomy. Launched this month (June), the company’s latest achievement is the Proteus robot.
This low-profile warehouse robot can lift and move around large inventory racks without direct supervision from a human. In addition, where previous robots needed to be physically separated from human “co-workers” for safety reasons, Proteus robots are able to see and sense when humans are in their area. They can change their trajectory to avoid collisions with their human co-workers, as well as other robots and inventory racks. The result is the two can work side-by-side without safety concerns.
One final example of how Amazon is innovating involves augmented reality (AR). Earlier in June, it rolled out a nifty tool for helping customers choose shoe styles and shoe colors. The tool works in conjunction with customers’ smartphones.
After downloading a special Amazon app, customers can use their smartphone cameras to test out different shoes. After aiming their cameras at their feet, the app will “draw-in” shoe avatars of selected styles and colors to help these customers decide which option they think will look best.
Example of Amazon’s augmented reality app that helps you better imagine how a new pair of shoes will look (Source: cnbc.com)
As with nearly every stock right now, Amazon stock has taken a big hit. It’s down to somewhere around 70% of its peak value back in November of last year. Given all that Amazon has to offer, the stock price will surely rebound.
However, it’s important to remember that the stock split 20 to 1 back on June 2. That means pre-split it took about $2,000 to get a share of Amazon. Now, you can get in at around $115 per share. This makes owning a piece of Amazon obviously more accessible to more people. A better overview of the stock performance is shown in the chart below.
Also, bear in mind that Amazon also owns the biggest cloud services platform in the world, and it makes tons of cash that AMZN puts right back into its existing and new ventures.
In this kind of down market, it’s likely AMZN will be looking for opportunities to make a significant merger, or move into a new sector it thinks it can disrupt. There are few big companies that think this way, and even fewer that sport a $1 trillion-plus market cap.
AMZN stock is down 35% year-to-date, but that makes now a great time to start to accumulate a position. Its post-split price makes that even easier. If you already own some, this is a good time to pick up some extra shares cheap – it’s like Prime Day early!
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