AMZN stock forecast as of June 2022
Amazon stock forecast for the next 12 months averages $177.4, with a $107 minimum price and a maximum of $235.75. The stock forecast was updated after the Amazon stock split on June 3rd, 2022. The 51 Wall Street analysts making the forecast are bullish on Amazon, with the minimum stock forecast very close to AMZN’s current price. The price prediction, however, represents a drop compared to the average price target of $4,032 made by the analysts before Q1 earnings.
The latest stock forecast was lowered because of the company’s slow growth and poor sales estimation presented during Q1 earnings. In addition, analysts predict slower sales growth for the next quarter, with a growth rate between 3% and 7%, instead of the 9% growth that Amazon has shown in previous months. Because of this, analysts have dropped their Amazon stock forecast by 7% compared to the March price prediction.
Currently, Amazon is trading slightly above the lowest stock forecast. This means that the stock is currently undervalued. Additionally, all 51 analysts have given a BUY rating to AMZN. As a result, the average target price for the next 12 months is 40% higher than the current price.
The stock price of Amazon (NASDAQ: AMZN) has been dropping by 35% YTD, underperforming the Nasdaq and losing almost 30%. It has also underperformed the S&P500 by losing 21% in the same period. However, the market is bullish on AMZN, thanks to the 20-to-1 share split with a record date that took place on June 3rd, 2022.
There are also rumors that Amazon will be admitted into the Dow Jones Industrial Average anytime soon. The Index does require new companies to have similar prices to the existing ones already listed, and not allowing one to have more importance than the other. Therefore, according to analysts, Amazon is one of the best stocks to buy now.
Amazon stock forecast is bullish on the news that Doug Herrington is the new CEO of Worldwide Amazon Stores
In a surprise move on Tuesday, Amazon announced Doug Herrington as the new CEO of its Worldwide Amazon Stores division. After Dave Clark’s resignation earlier this month, he was named CEO of Flexport, a logistics software company.
Since joining Amazon in 2005, Herrington has been in charge of the company’s North American Consumer division since 2015. He formerly held the post of CEO of the company KeepMedia, a firm that offered magazine subscriptions digitally. He was also the chief of marketing for Webvan, an online grocery service during the internet bubble period.
Amazon has also hired John Felton, who will report to Herrington as the company’s director of operations. About 18 years ago, Felton joined the firm. He took over when he was promoted to lead the Global Delivery Services division in 2019. According to CEO Andy Jacsy, in a blog post announcing the change, E-commerce is still an enormous development area.
The news was well received by investors and analysts. AMZN was trading in green on the day of the announcement, and Amazon stock forecast was increased by several points by analysts.
According to Jassy, “[W]e’re still in the early stages of what we can do.” Amazon only accounts for roughly 1 percent of the global retail market segment, and 85% of that market segment is still based on brick-and-mortar establishments. Long-term success requires persistence. We must remain laser-focused on offering the most excellent possible client experience (the most comprehensive variety, the lowest pricing, and quick and easy delivery) while also trying to improve our cost structure”.
Excess warehouse space could be a high cost for Amazon and bring down its stock forecast.
Amazon is experiencing excess space issues as sales seem to go down significantly this year. Amazon.com Inc. is looking to vacate or sublease at least 10 million square feet of warehouse space, as the multi-national company experienced slow sales during the first two quarters of 2022.
As per some reports, the exact excess space may be as much as 30 million square feet. While it may seem a lot of space, 10 million sq. ft. is roughly equal to Amazon’s 12 large fulfillment centers, or approximately 5% of additional space Amazon acquired on lease during the last 2 years.
Amazon rushed to significantly increase its warehouse capacity when online sales surged during the pandemic.
As the world moves towards a pre-pandemic scenario, however, Amazon has noted that millions of square feet of its warehouse space may prove out to be in excess in the near future. As a measure to cut costs due to excess space, which are expected to be around $10 billion, Amazon is now looking to find better alternatives.
The most obvious of these alternatives is to sublease or vacate this excess space.
As a result of this fall in sales, Amazon saw a decline in its net income during the first quarter of 2022, as its net income amounted only to $3.7 billion. To make things worse, the e-commerce giant expects to close its next quarter anywhere between a negative of $1 billion to a positive of $3 billion net income.
Amazon recently announced its massive plan to decrease overall warehouse space and a range of strategies to pursue it.
In some cities, it has already started the process of subletting extra space and/ or to terminate leasing agreements prematurely. It is also worth noting here that rent rates increased massively during 2021, when it rose to 17.6% in some territories, adding to the worries of Amazon’s CEO.
Stock plunge on disappointing Q1 2022, but analysts confirm their Amazon stock forecast at $3,680
The Q1 2022 earnings report has been a bit of a disaster for Amazon, where the company reported its first two-year loss as sales stalled and prices increased. While the announced revenues were close to the expected result, Amazon reported an EPS of -7.56B versus the 8.49 predicted. This led to the stock plunging by 14.05% after the announcement was made. One thing that contributed to this poor earning result was Amazon’s investment in Rivian, an electric car firm. Amazon controls 20% of the company, which lost over 50% of its value; resulting in Amazon suffering a loss of $7 billion.
Regardless of this significant loss attributed to Amazon’s acquisition of shares in Rivian, the company’s other business areas, such as cloud computing and advertising, continued to grow (as explained further below). That is why analysts haven’t changed their stock forecast, which is still set at over $4k. In addition, premium research firms, including MKM Partners and Truist Securities maintained their Buy rating; while Cowen & Co., BMO Capital, and Truist Securities, all kept their Outperform rating.
How advertising and AWS growth have contributed to influencing Amazon stock forecast favorably
Although Amazon is the dominant e-commerce platform, a portion of the corporation devoted to Amazon’s delivery services is losing money and needs significant financial investment. However, the company’s retail sector – which offers high margins and long-term development – gives access to a large customer base (Amazon’s website receives over two billion visitors every month), enabling the corporation to collect data for advertising purposes.
According to Zenith, the worldwide advertising industry will expand by 5.7 percent in 2023 and 7.4 percent in 2024. The United States will account for over half of that growth, providing Amazon with a considerable advantage.
Amazon’s ad business is growing rapidly. In 2021, ad revenue reached $31.2 billion. This was an increase of 58% compared to 2020 and a 146% increase from 2019.
Aside from these exciting projections, there is enough evidence that Amazon’s advertising is cost-effective. According to BusinessWire, 58 percent of businesses saw “excellent value” in Amazon advertising, while a Feedvisor survey revealed a seven-fold return rate.
And aside from advertising, Amazon’s cloud service accounts for less than 10% of sales but accounts for more than two-thirds of profits. So despite Microsoft (MSFT) and Google (GOOGL) gaining market share, AWS continues to control roughly one-third of this fast-expanding company.
AWS’s sales climbed by 37% in 2019. However due to the pandemic, growth slowed in 2020 and increased by 30%, but picked up again in 2021 with an expansion of 37%. AWS growth in Q4 was 40% greater than the previous year. AWS has also posted four consecutive quarters of growth. The cloud market is also expected to soon increase by double digits. According to Grandview Research, the CAGR will be 15.7 percent by 2030. During that time, the current market would have increased by 272 percent.
Five-year Amazon (AMZN) stock forecast price
A record closing price of $3,731.41 was set on July 8, 2021. However, inflation, quantitative easing, and rising interest rates contributed to a decline in the price, which continued through the end of the year and early 2022.
On January 27, investment bank BMO Capital Markets had lowered its Amazon price estimate by $800 (down from $4,100). However, since then, most Amazon stock predictions have indicated a price of at least $4,000 per share.
Tigress Financial raised its price objective from $4,460 to $4,655 on February 18. On March 10, Deutsche Bank analysts gave Amazon a ‘buy’ (previously you’ve capped ‘Buy’)rating and a target of $4,100 for their future stock, this followed the news of Amazon’s new salary policies.
JP Morgan, a US-based research firm, says stocks are currently undervalued. But, according to the company, “revenue growth will accelerate in Q2 due to reduced competition, the resumption of Prime 1-day/same-day perks, and price increases on Prime and FBA through 2022.”
The forecast predicts that Amazon’s spending will decline after two years of significant growth and increase its operating profit margins by 100 basis points. Amazon has quadrupled the capacity of its fulfillment network since the Covid-19 outbreak. JP Morgan expects to see a return on this investment by 2024.
According to Wallet Investor, Amazon’s stock price will rise by more than $5,000 in the long term, according to its long-term estimate. In late December, an algorithm-based online prediction tool indicated that Amazon’s stock price would rise to $3,708,315 and $4,346,483 within the decade. At the end of 2025, the stock can be valued at $5,631.56 and $6,357,492 in March 2027.
CoinPriceForecast’s predictions suggested the stock could reach $6,360 in 2030. The 2022 average price was $3,854, while the 2025 average price was $4,720.
