Amazon is the largest and most successful retailer in the western world. But it’s not only that – Amazon is also one of the few trillion-dollar US companies that publicly offer stocks. The good news for investors is that they can do everything online.
While we do not specifically advise buying Amazon shares, we want to give you a detailed explanation of what this process entails. With this article, you’ll be armed with knowledge on how to approach Amazon investing as a beginner. And then it’s up to you to decide whether buying these shares is a good choice for you.
Today Amazon is a leading e-commerce, logistics, payments, hardware, data storage, and media company. It dabbles in many other industries. Its history dates back to 1994, and since this time, it’s successfully dabbled in many industries and services.
The company is listed on the NASDAQ and is traded as AMZN. Below is a table containing a short profile on Amazon.
Industry | Internet Retail |
Code | AMZN |
Country name | USA |
Exchange | NASDAQ |
Type | Common Stock |
Currency code | USD |
Full-time employees | 840,000 |
Headquarters | Seattle, US |
Founder | Jeff Bezos |
Services | Amazon.com, Amazon Alexa, Amazon Appstore, Amazon Music, Amazon Prime, Amazon Prime Video, Amazon Web Services |
Products | Amazon Echo, Amazon Fire, Amazon Fire TV, Amazon Fire OS, Amazon Kindle |
While Amazon.com started as a bookseller, Jeff Bezos always intended to grow further into other niches. His main goal was to make it a technology company, which could solve the issue of online transactions for consumers.
Financial journalists and analysts met this strategy with criticism, even famously calling it Amazon.bomb. However, the effort paid off in the final quarter of 2001. The lack of company profits changed to overwhelming success. However, Amazon was involved in a massive controversy. It famously paid no federal income taxes in 2017 and 2018, despite recording several billion dollars in profits each year.
Becoming a legitimate Amazon shareholder isn’t that complicated. The good thing is that whether you’re buying AMZN or shares in another company, the process is largely the same.
You need to find an online broker that has access to a wide variety of exchanges and possibly multiple markets. Needless to say, you need to look specifically for NASDAQ. Otherwise, you won’t be able to purchase what you want.
Another important thing is that your broker should match your individual requirements. For example, not all brokers accept Australian residents. Or the terms might be set up against you – such as super high prices for low transaction volumes.
Take into account the following factors when you decide on a particular broker:
Opening an account in a broker platform is quite similar to opening a bank account. The biggest difference is that it’s fully online. Usually, it’s very quick, and you don’t need to submit identification documents or proof of credit. But with some firms, it might take a few days until they run a background check on you.
Loading up your account with money is even easier than opening an account. Most traders fund their trading accounts with a credit card, which is the fastest way. But we’ve briefly mentioned that there are many other convenient ways to deposit funds.
Also, look for a broker that doesn’t charge you for depositing money. If anything, the broker actually benefits from you making more trades (since there are usually fees for opening trades).
At this point, you have the account, the cash, and the share target. Open your account, search for the Amazon stock, and press buy. Obviously, there are some intricacies with this process, but executing the buy order is essentially as easy as buying anything online.
When placing an order, you can choose from different order types, such as:
As an investor, you need to keep monitoring your positions. This is an essential part of any good investment strategy. If you are investing in Amazon short-term, you can use trading tools to figure out the best time to sell or manage your losses. For example, set the target price to sell the stock or use the stop-loss.
Long-term investors should keep an eye on big company events. For instance, you can participate in annual meetings and go through reports with any relevant news and information about Amazon.
Amazon shares aren’t listed on the Australian Exchange (ASX). It means you won’t be able to buy them directly. That said, there are a few ways to buy Amazon stock in Australia:
The chain of Amazon’s successful venture has captured the interest of many investors. What makes this company a good option for investment even in the face of economic uncertainty? Here are several reasons:
Despite having impressive strengths, Amazon is still not foolproof. Cons of buying AMZN stock are:
Simply knowing how to buy Amazon shares isn’t enough to make you a successful trader/investor. Before you make any substantial profit, you will need to learn a lot. It includes not only studying the ins and outs of the financial world but also your personality and style. On top of that, trial and error are required to gain real experience.
What can we recommend? While there is no one-size-fits-all approach, we can give the following tips, which will suit most traders:
It’s a nerve-wracking possibility that you might buy an overvalued stock and lose money. There’s heated debate on whether Amazon is one of those companies. The current situation shows that Amazon’s future growth is very likely to continue.
But as you may know, predicting future performance based on the past is not always a good idea. Use our tips, analysis, and other online resources to determine how much to purchase and when. And remember that buying a stock like Amazon can be exciting, but that you won’t achieve success overnight.