– Amazon Stock –
Over ten years ago, Amazon stock has increased significantly in value. And with future potential growth, you may want to invest in the retail giant. Here’s a quick guide on how you can buy shares of Amazon stock.
Amazon’s stock is available to investors of any age (18 in some states, or 21 in others). The method through which potential investors can acquire a share, however, is important to consider.
Many companies offer direct investment options for their stock, but those interested in purchasing through Amazon, however, must utilize a brokerage account to become a shareholder.
Amazon’s historical trajectory and double-down launch toward success is an absolute corporate legend. Amazon was founded as an online book-selling company in 1994 out of Jeff Bezos’s garage, and shortly thereafter, in 1996, rolled out its IPO.
It began expanding internationally in 1998 and it continued to build its fulfillment center infrastructure. From there, Amazon continued growing at a pace unmatched by any other company.
In 2006, Amazon plowed through the $10 billion mark. More than just a few things contributed to Amazon’s success story in the late 2000s, but here are a couple of major innovations:
- Amazon Web Services (AWS) for public usage was created.
- Kindle was unveiled in 2007.
- AmazonFresh and Amazon Music were created.
In the 2010s, a few more things contributed to Amazon’s upward swing:
- Amazon Prime Video (released in 2011)
- Cloud computing area with Amazon AWS
- Crowdsourcing with Amazon Mechanical Turk
- Amazon Restaurants was created
- Streaming services like Amazon Music and Amazon Video
- A cashier-less grocery store was added to Amazon’s arsenal
Pros of Buying Amazon Stock
- Jeff Bezos, CEO of Amazon, is a major pro himself. He’s a founder who runs his own company, invests in growth opportunities, leads gigantic markets, and attracts and motivates talented individuals. That’s an excellent reason to invest in a company.
- Amazon has an obsession with customer service, which will sustain the company.
- Has a willingness to dip its toe into a wide range of industries.
- Amazon Web Services produced $1.4 billion worth of operating income, showing that Amazon is able to maintain its pricing power.
Cons of Buying Amazon Stock
- It’s pricey. As of January 8, 2019, AMZN opened at $1,665 per share.
- Amazon is huge, which, in ways, makes it risky to manage as the individuals at the top may not be able to manage everything at the bottom, and those at the bottom are typically the individuals who directly deal with customers.
- It has over $119 billion worth of obligations it will have to meet in the future.
How to Buy Amazon Shares
The easiest way to buy Amazon shares directly is through a brokerage account, which you would have to open if you don’t have one already.
Examples of popular brokerage platforms include:
- Charles Schwab
- TD Ameritrade
Amazon shares trade with the ticker symbol AMZN on the NASDAQ exchange.
You can purchase the stock using either a market order or a limit order.
1. Market Order
With a market order, you’ll enter an order to purchase, say 10 shares of stock at the prevailing market price.
If that price is $1,750 per share, your total acquisition will be $17,500 – plus the commission of $4.95.
2. Limit Order
With a limit order, you enter an order to purchase the stock at a certain price (or better). For example, if you set a limit order to buy 10 shares of Amazon at $1,740, the purchase won’t go through until that price threshold is reached.
Theoretically, if the price never falls to that level, the limit order will never be executed.
3. Amazon Direct Stock Purchase Plan (DSPP)
If you want to purchase stock directly on Amazon, without going through a broker, you’re in luck. The company launched a DSPP in August of 2019. You can take part by opening an account with Computershare, where you can purchase, hold and sell Amazon stock.
Do note: There are transaction fees for both buying and selling stock, which will vary based on the company stock you’re buying or selling.
4. Ownership Through a Mutual Fund
Rather than purchasing shares of Amazon directly, you can also own them indirectly through an ETF or a mutual fund. This will certainly be the case with any fund that’s based on the S&P 500 index. Amazon is currently the third-largest component of the S&P 500.
If you want a larger position in Amazon, you can invest in mutual funds that specialize in tech companies, and in which Amazon might represent an even larger share.
Whether you hold the stock through an index fund or a mutual fund, you’ll also have the advantage of diversification into other stocks.
Should Amazon underperform the market, your investment may still turn positive on performing other stocks in the fund.
5. Use a Robo-advisor
If you want even more diversification in your portfolio, you can invest with a robo-advisor. These are automated online investment platforms that create and manage a portfolio of several funds for you. Given the popularity of Amazon, the stock is well represented in virtually any robo-advisor portfolio.
If you like the robo-advisor management concept but would like a larger position in Amazon, you can consider M1 Finance, which uses a unique investment strategy referred to as “pies”, in which you create your own investment portfolio.
For example, you can create a pie that comprises the five FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google). You can even choose the allocation, such as holding 40% of the pie in Amazon stock.
That will give you a powerful position in Amazon, as well as some diversification with other major stocks. And best of all, M1 Finance charges no investment fees.
You can even choose the allocation, such as holding 40% of the pie in Amazon stock. That will give you a powerful position in Amazon, as well as some diversification with other major stocks.
Buying stock can be exciting, but success won’t happen overnight. Investors should take a long-term perspective on their investments.
They should also advantage of dollar-cost averaging if they believe in the stock for the long haul.
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Amazon Stock FAQs
1. When does Amazon’s fiscal year-end?
Amazon’s fiscal year ends in December.
2. Where is Amazon based?
In the USA. Amazon’s address is 410 Terry Avenue North 98109, Seattle, USA.
3. What is Amazon’s International securities identification number?
Amazon’s ISIN is US0231351067.
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