Investing in Amazon Stock (AMZN)

What you need to know when investing in Amazon

Amazon.com Inc. (AMZN), one of the largest companies in the world, is a global leader in e-commerce and cloud computing. The company operates an online marketplace offering a vast variety of products mostly from other merchants, including electronics, apparel, furniture, food, and toys. It also offers video and music streaming services. Amazon's cloud services platform hosts online applications for a broad range of customers.

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 retailer. Instead, Bezos saw Amazon as a technology company whose competitive advantage was making online transactions simpler for consumers. Amazon shares began trading following an initial public offering (IPO) in May 1997. Its stock is listed on the Nasdaq Global Select Market.

Amazon has long been based in Seattle. In 2018 it unveiled plans for a "second headquarters" in Arlington, Virginia, which is slated to open in 2023. Andy Jassy has been the e-commerce giant's CEO since succeeding Bezos in July 2021. Bezos remains as executive chair. Amazon is grouped with consumer discretionary stocks for investing purposes, though it is also included in many mutual and exchange-traded funds focused on the technology sector in recognition of Amazon Web Services' (AWS) status as a leading cloud computing provider. The company's main competitors include brick-and-mortar retailers like Walmart Inc. (WMT), the e-commerce platform operator eBay Inc. (EBAY), and cloud computing services rivals Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL). Amazon posted net income of $33.4 billion on net sales of $469.8 billion in FY 2021, which ended Dec. 31, 2021.

Key Takeaways

  • Amazon is an online retailer, streaming services provider, and cloud computing company.
  • Amazon's rivals include Walmart, eBay, Microsoft, and Google parent Alphabet.
  • Amazon earned $33.4 billion in net income on net sales of $469.8 billion in FY 2021.
  • On March 9, 2022, Amazon's board of directors approved $10 billion in share buybacks and a 20-for-1 stock split that went into effect on June 3.

Amazon's Recent Developments

  • On May 2, 2022, the results of the second of two unionization votes at Amazon facilities were announced. The first vote came out in favor of unionization, the second against.
  • On March 9, 2022, Amazon's board of directors approved a 20-for-1 stock split and authorized a buyback of up to $10 billion in shares over an indefinite period of time. Shareholders of record on May 27 received their additional shares on June 3, with the stock resuming trading on a split-adjusted basis on June 6.
  • Also in March, one U.S. judge dismissed an antitrust suit by the District of Columbia over the company's pricing rules for third-party merchants, while another U.S. judge refused to dismiss a private class-action suit challenging similar practices.
  • On April 1, 2022, workers at one of the company's warehouses in Staten Island, New York, voted to be represented by the recently formed Amazon Labor Union, the first successful unionization vote at an Amazon facility.

What's Happening with the Amazon Union Votes?

On April 1, 2022, workers at Amazon's JFK8 warehouse in Staten Island, New York, elected the recently formed Amazon Labor Union to represent them in collective bargaining, the first successful unionization effort at an Amazon facility. On April 8, 2022, Amazon filed a motion with the National Labor Relations Board (NLRB) asking it to invalidate the Staten Island election results, alleging legal violations by union backers and bias in favor of the union by the NLRB's regional office. On April 9, 2022, the NLRB said workers at an Amazon warehouse in Alabama rejected union representation on March 31, in an election re-run because the NLRB ruled the company improperly interfered with the first vote. On April 18, 2022, an administrative law judge ruled Amazon illegally fired an Amazon Labor Union from his job at the Staten Island warehouse in 2020 in retaliation for protected organizing activities. On April 25, 2022, workers at a second Amazon warehouse in Staten Island began voting on union representation. However, the effort to unionize the Staten Island warehouse failed, with 618 employees voting against joining the union and 380 for, according to results released by National Labor Board announced on May 2, 2022.

What's Happening with Amazon's Product Recall?

In mid-July 2021, the U.S. Consumer Product Safety Commission (CPSC) sued Amazon to force it to recall hazardous products sold on its marketplace by independent merchants. The products included 24,000 faulty carbon monoxide detectors, 400,000 hair dryers sold without the required immersion protection devices to guard against electrocution risk, and an unspecified number of children's sleepwear garments that failed to meet mandated flammability standards. While Amazon removed some of the hazardous product listings, notified purchasers they presented a hazard and offered a refund in the form of an Amazon gift card, it failed to comply with all the requirements the CPSC imposes on product distributors, including issuing an agency-approved recall notice specifying the hazards, tracking product returns and documenting the destruction of hazardous products, Amazon contended it was a third-party logistics supplier exempted from CPSC distributor rules. On, Jan. 19, 2022, an administrative law judge ruled Amazon must comply with CPSC distributor rules because it handles functions that qualify it as such, including decisions on product returns and consumer refunds.


What's Happening with the Antitrust Lawsuits Against Amazon?

On March 18, 2022, the a U.S. Superior Cout judge dismissed an antitrust suit filed against Amazon by the attorney general for the District of Columbia, ruling the suit failed to show that Amazon's agreements with third-party merchants obligating them to price their products on Amazon no higher then they do elsewhere serves to increase consumer prices. On April 13, 2022, the attorney general for the District of Columbia sought reconsideration of the ruling, arguing the agreements allow Amazon to charge higher fees for third-party listings than other online marketplaces, because merchants can't pass on the lower listings fees to consumers.

On March 11, 2022, a U.S. district court judge in Washington state refused to dismiss a class action suit against Amazon over the same "most favored nation" pricing rules, brought by two frequent Amazon shoppers and several law firms.



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

On March 17, 2022, Amazon said it completed its acquisition for $8.45 billion of MGM, along with its catalog of more than 4,000 films and 17,000 TV shows. MGM was not the same company as MGM Resorts International (MGM).

The acquisition, announced on May 26, 2021, was Amazon's second-largest after its $13.7 billion deal for Whole Foods in 2017, and will allow the company to augment its video streaming offerings. The Federal Trade Commission (FTC), which closely scrutinized the deal, reportedly did not attempt to block it because its four commissioners were split along party lines on the matter.

FAQs

Has AMZN ever split its stock?

Amazon has split its stock four times, as follows. The first three stock splits took place in its first two years as a public company, and the fourth more than 20 years later. as follows:

  • June 2, 1998: a 2-for-1 split.
  • Jan. 5, 1999: a 3-for-1 split.
  • Sept. 1, 1999: a 2-for-1 split.
  • June 3, 2022: a 20-for-1 split.

Does AMZN pay a dividend?

No, it does not pay a dividend.

How many shares of AMZN stock are there?

As of Apr. 20, 2022—the date of the last official disclosure—Amazon had 508,720,481 shares outstanding. Following its June 3 stock split, Amazon has 10,174,409,620 shares outstanding.

Who is Amazon's CEO?

Andy Jassy, who succeeded founder Jeff Bezos on July 5, 2021. Jassy is also a member of the board of directors, where Bezos is executive chair. Jassy founded AWS, Amazon's highly profitable and 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 annual sale event for Amazon Prime subscribers. In 2021, the Amazon held its Prime Day event June 21-22, offering discounts on more than 2 million product items.

Article Sources
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