AMZN Stock (NASDAQ:AMZN) Hovers Around All-Time High: What Should You do Now?

While the coronavirus pandemic has done untold damages to companies in many sectors, some companies have managed to win big, and one such company is e-commerce behemoth Amazon.com, Inc. (NASDAQ:AMZN). The lockdown and stay at home orders passed by governments worldwide have meant that people are increasingly turning to e-commerce platforms for most of their essential needs.

Key Triggers

Amazon has emerged as the platform of choice for millions, and that was reflected in the company’s first-quarter financial results. The performance triggered mixed responses from investors, but the fundamental question remains whether it is the right time to buy the Amazon stock.

Due to the soaring sales on its platform, the revenues jumped as much as 26% year on year to hit a staggering $75.5 billion in the first quarter. If the negative effect of the poorer foreign exchange rate is ignored, then the growth stood at 27%. While revenues soared, the operating income declined by 9% year on year to $4 billion.

On the other hand, earnings per share went down by 29%. In order to fulfill the higher demand, Amazon had to hire 175,000 more workers and had also raised the minimum wage. That had an impact on the profits.

Amazon Web Services, which remains the company’s cash cow, generated $10.2 billion in revenues and clocked year on year growth of 33%. The company’s charismatic founder and CEO Jeff Bezos said that shareholders might want to keep holding the stock since the company isn’t ‘thinking small.’

The forward price to sales ratio stands at three at this point, and while Wall Street analysts expect 22% growth this year, it should be noted that Amazon has a history of beating expectations. As things stand, it is quite clear that Amazon is likely to grow further in the long term, and its online shopping platform has become one of the more vital ones at a global level. Hence, it might be worthwhile for investors to keep an eye on the stock.

About Travis Garlick 1660 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.