Investors eager to back Amazon (NASDAQ:AMZN), the e-commerce behemoth rapidly reshaping how global consumers make purchases and receive deliveries, are eyeing the company with some suspicion after the Bank of New York Mellon Corp (NYSE:BK) decreased its holdings in the company. The bank sold some 1.8% of its holdings in the company during the second quarter, with other institutional investors and hedge funds getting in on the trading as well.
Those ready to abandon Amazon may come to regret their timing; as the holiday season picks up, millions of customers in the U.S. alone are likely to rely on the e-commerce giant for their Christmas and Black Friday shopping, which could provide further winds to its sails as it continues its quest to gobble up as much retail market share as possible.
After the company acquired Whole Foods in a gargantuan deal worth some $13.7 billion, it’s likely eager to keep its expansion-spree going. Whispers that the company could acquire Rite Aid for access to lucrative state pharmacy licenses have been going around, for instance, and there’s little reason to think that Jeff Bezos’ rapidly growing empire will stop expanding anytime soon.
Amazon’s cloud business is rapidly marching towards a staggering $20 billion in annual revenue, too, with sources telling CNBC that it’s about to enter into a huge health-care deal with Cerner. Few investors have any reason to doubt Amazon, which now has its tendrils extended into virtually every corner of the market. It’s unlikely the Bank of New York Mellon Corp’s selling of shares will make a long-term dent in its future as the company moves forward.
There’s no certainty in the busy world of the stock market, however, and Amazon would be foolish to assume that it’s gargantuan weight in today’s economy insulates it from business failures experienced by others. While Amazon can count on the boom of e-commerce that’s rocked global markets these past few years, the company will need to remain ambitious with its acquisitions if it intends to remain profitable.
Investors are far from abandoning ship, however; few companies have enjoyed the absolutely mind-boggling growth that Amazon has. After all, how many other companies have investors whispering that it may be the first $1 trillion company? Amazon’s unique place in today’s digitally-focused economy, positioned as it is to acquire any of its would-be competitors long before they can become a threat to the company, could serve to earn its investors serious cash for decades to come.
Any company with such a sky-high valuation involved in product development finance, has to do a lot of work to justify its pricey stock tags, but few are doubting that Amazon is ready to put its money where its mouth is. As the company considers future acquisitions in the health-care industry, and continues to expand its digital footprint and scoop up more Amazon Prime subscribers, it’s likely to retain the market’s piqued interest for a long time.
The past five years have been particularly lucrative for Amazon, with some analyst predicting that its next five years could be even better; some even insinuate the company could enjoy 58% growth rates. As Amazon expands its partnerships and continues to gobble up any potential competitors, more investors will be hopping on board, to the point where today’s expensive share prices may look like nothing but a few years from now.
Gamblers looking for quick profits should turn elsewhere; Amazon is here to stay, and will crush any investors hoping to make a quick buck at the company’s expense. There’s a new way of doing business that’s rapidly spreading all over the world, and its name is Amazon.