Why is Amazon Stock so Cheap?

If you only see retail, you’re missing the big picture.

Andrew Willis 13 January, 2023 | 4:18AM
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Andrew Willis: It’s understandable that retail investors might relate a drop in packages on doorsteps post-pandemic to a poor outlook for Amazon (AMZN). Covid pulled forward a lot of consumer demand – but did so by changing consumer behaviour and solidifying the presence of ecommerce in categories like groceries, pharmacy and luxury goods.

And retail isn’t necessarily the area of Amazon where we see the most growth going forward. While building out its retail network, the company established strong advertising channels and a solid presence in the cloud with AWS.

Senior equity analyst Dan Romanoff sees retail-related revenue growth growing around 7% compounded annually, for the next five years. But on advertising, he projects 20% and on AWS, 22% going forward. So, you really can relate the word ‘Amazon’ with ecosystems.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Amazon.com Inc185.57 USD-1.86Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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