Investing in Amazon Stock (AMZN)

What you need to know when investing in Amazon Inc. (AMZN), one of the largest companies in the world, is a global leader in e-commerce and cloud computing. The company provides an online marketplace offering just about everything, including electronics, apparel, furniture, food, toys, and much more. It also offers video and music streaming services. Amazon's cloud services platform enables organizations to develop, build, and deploy online applications for a broad range of needs.

Founded in 1994, Amazon started out as an online bookstore. But its founder and former chief executive officer (CEO), Jeff Bezos, envisioned Amazon as more than merely an online retail company. Instead, Bezos saw Amazon as a technology company whose competitive advantage was making online transactions simpler for consumers. Three years later in May 1997, Amazon went public through an initial public offering (IPO). Its stock is listed on the Nasdaq Global Select Market.

Amazon has headquarters in Seattle, Wash. and Arlington, Va. Andy Jassy is the e-commerce giant's CEO, having taken over from Bezos in July 2021. Amazon is classified as a member of the consumer discretionary sector. But the company has used its technological prowess to dramatically expand beyond that into other industries, including cloud computing services, where its Amazon Web Services (AWS) is the dominant service provider. Some of the company's main competitors include brick-and-mortar retailer Walmart Inc. (WMT), e-commerce online auction site eBay Inc. (EBAY), and cloud computing services rivals Microsoft Corp. (MSFT) and Google Cloud parent Alphabet Inc. (GOOGL). Amazon posted net income of $21.3 billion on net sales of $386.1 billion in FY 2020, which ended Dec. 31, 2021.

Key Takeaways

  • Amazon is an online retailer, streaming services provider, and cloud computing company.
  • Amazon's rivals include Walmart Inc. (WMT), eBay Inc. (EBAY), and Microsoft Corp. (MSFT).
  • Amazon earned $21.3 billion in net income on $386.1 billion of net sales in FY 2020.
  • In mid-September, the attorney general of the District of Columbia filed an amended antitrust lawsuit against Amazon.

Amazon's Recent Developments

  • On Sept. 13, 2021, Karl Racine, the attorney general for the District of Colombia, filed an amended antitrust suit against Amazon that focuses on the company's relationship with wholesale suppliers. (see details in Q&A below).
  • On Aug. 27, 2021, Affirm Holdings Inc. (AFRM), which operates a buy now, pay later payment platform, announced that it was partnering with Amazon. As a result, select Amazon customers now can split the total cost of their purchases of $50 or more into simple monthly payments. Approved customers never pay more than what they agree to at checkout during online transactions.

What's Happening with the Amazon Union Vote?

In early April 2021, more than 70% of Amazon workers at a warehouse facility in Bessemer, AL voted against joining the Retail, Wholesale and Department Store Union, according to the National Labor Relations Board (NLRB). Less than two weeks later, the union filed an objection to the vote, arguing that Amazon had violated certain legal restrictions during the election. The union alleges that the company used tactics to intimidate employees into voting against unionization. In early August 2021, a NLRB official issued a 61-page recommendation that could lead to a second unionization vote.

What's Happening with Amazon's Product Recall?

In mid-July 2021, the U.S. Consumer Product Safety Commission (CPSC) sued Amazon for allegedly allowing defective products to be sold by third-party sellers on its online marketplace. The products include: children's sleepwear that failed to meet flammability standards, faulty carbon monoxide detectors, and hair dryers. In its complaint, the commission highlighted hundreds of thousands of products sold on Amazon's platforms. The commission said that Amazon took insufficient steps to address the defects even after the company was notified. Amazon has argued that it simply provides a service to connect buyers and sellers, and thus is not liable for products sold by third-party vendors.

What's Happening with the Antitrust Lawsuits Against Amazon?

As mentioned earlier, on Sept. 13, 2021 Washington, D.C., broadened an antitrust lawsuit against Amazon that was first filed in May. The initial lawsuit alleged that Amazon prevents sellers offering better deals outside of the company's own marketplace, resulting in customers paying higher overall prices. The new allegations expand the original lawsuit to include wholesalers. The latest complaint includes allegations that Amazon has deals with wholesalers that guarantee the company a minimum profit, and which give wholesalers a disincentive to lower prices.

On Nov. 10, 2020, CNBC reported that the European Union (EU) accused Amazon of breaching antitrust rules by using third-party sellers' data in order to benefits its own business. The EU also launched a second formal investigation into Amazon's e-commerce practices.

What's Happening with Amazon's Acquisition of MGM?

On May 26, 2021 Amazon announced that it has agreed to acquire entertainment company MGM for $8.45 billion. MGM has a catalog of more than 4,000 films and 17,000 TV shows. The acquisition would enable Amazon to sharply boost its offerings of entertainment content in the hotly competitive streaming market. The acquisition, which is subject to regulatory approvals, would be Amazon's second-largest acquisition after it paid $13.7 billion for Whole Foods in 2017.

On July 9, 2021 Reuters reported that the FTC will be conducting an extended investigation into the proposed acquisition, according to a source familiar with the matter. Reuters said that the agency had issued a second request in reviewing the merger, according to the source, which means it could take months for a decision on the deal.


Has AMZN ever split its stock?

Amazon has split its stock three times:

  • Sept. 1, 1999: a 2-for-1 split of common shares.
  • Jan. 5, 1999: a 3-for-1 split of common shares.
  • June 2, 1998: a 2-for-1 split of common shares.

Does AMZN pay a dividend?

No it does not pay a dividend.

How many shares of AMZN stock are there?

As of July 21, 2021 Amazon had 506,440,520 shares outstanding.

Who is Amazon's CEO?

Andy Jassy, who took over the CEO position from founder Jeff Bezos on July 5, 2021. Jassy is both president and CEO of the company, and also a member of the board of directors. Jassy founded AWS, Amazon's highly profitable, fast-growing cloud computing platform. He was CEO of AWS from April 2016 until July 2021. Jassy has been with Amazon since 1997.

What is Amazon Prime Day?

Amazon Prime Day is Amazon's big sale event that takes place every year. The most recent Prime Day event began at midnight on June 21 and ran through to the end of June 22, lasting two full days. During those days, Amazon Prime members in a number of countries had access to more than 2 million deals across every category, including fashion, home, beauty, electronics, and more.

Article Sources

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