A $1,000 Price Target for Amazon Is Reasonable

FANG stocks have been performing very well since the start of 2015. Amazon.com, Inc. (AMZN), despite the scare at the start of 2016, has also performed really well this year, outpacing the other three stocks: Facebook Inc (F), Netflix, Inc. (NFLX), and Google (GOOG)(GOOGL).

Amazon has been a consistent performer and I expect it to deliver another good quarter heading into the earnings season.

Here are the numbers to know

In the latest reported quarter, Amazon posted robust results as the company’s earnings per share of $1.78 beat the analysts’ estimates by a wide margin of $0.67.

On the revenue front, Amazon’s sales came in at $30.4 billion, surpassing estimates by $850 million.
Sales growth surged over 31% year over year, a great achievement considering the massive size of the company.

At present, the company has over 300 million users using its platform, a metric which is also growing at a rapid rate.
A $1,000 Price Target for Amazon Is Reasonable
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Users continue to flock to Amazon’s low cost model and enormous range of products.

Moreover, the company is taking various smart steps to ensure continued growth, recently highlighting that India is set to become a major growth engine.

Unlike most companies, Amazon’s management is willing to sacrifice prevailing profits to offer the best customer experience, focusing on long-term growth rather than short-term profitability. A majority of customers think that Amazon is far better compared to its rivals like eBay Inc (EBAY).

Apart from this, Amazon has also decided to enter the photo finishing and photo books businesses. That's awful news for Shutterfly, Inc. (SFLY). Last week, shares of Shutterfly dropped 12%primarily due to the introduction of Amazon Prints.

Amazon Prints proposes photo books starting at just $19.99 and photo prints for only $0.09 per piece. The company is also proposing a free standard delivery for a limited time to entice huge customers.

If Amazon Prints successfully achieves momentum, it will represent yet another disrupted market that Amazon has conquered. At present stage, it is not a Shutterfly killer, but it might prove to be a tough competitor in the imminent quarters.

Amazon is the unique company that can't stop growing

Looking ahead, Amazon has plenty of growth opportunities in the long-run. The company has ventured into several segments that should benefit it for years to come.

Investors have been consistently reassured that Amazon can maintain a market-beating rate of growth. I wouldn’t be surprised to see the stock at $1,000 in a few months.
Published on Oct 10, 2016
By Prudent Investor

Copyrighted 2020. Content published with author's permission.

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