Amazon Shares Set To Surge

Amazon Shares Set To Surge

Shares of Amazon (AMZN) could be ready to surge in the near future.  The companies’ stock is trading 60% higher than it was this time last year, Amazon also reported an astounding Q4 EPS of $0.91.  There’s no doubt the online retailer is growing and I think things are about to pick up even more.

Recently, Amazon slipped details of their soon to be unlimited video streaming service.  It appears Amazon will include the Netflix (NFLX) like service for all Amazon Prime members. I don’t think Amazon is offering this service just to compete with Netflix, I think they’re also launching it to increase their user base so they can compete with Walmart (WMT).

Video streaming is growing at an alarming rate, Netflix recently reported that their subscriber base has grown to over 20 million users.  Amazon obviously wants in on this action.  Besides leaking plans to offer their own streaming service, they also acquired LOVEFiLM, a European DVD rental and streaming company very similar to Netflix.  If they include unlimited streaming to their US and European Prime customers, their customer base would grow exponentially.

If Amazon Prime membership surges, Walmart should take notice.  Amazon Prime members will likely chose the convenience of shopping from home over the chaotic Walmart experience. Here’s a few reasons why:

  • Amazon’s prices are extremely competitive, often lower than Walmarts.
  • Amazon Prime offers Free two day shipping, no driving, finding a place to park, dealing with large crowds and waiting in mile long line to check out.
  • If you need an item right away, Amazon Prime will overnight it to you for just $3.99.
  • Amazon does not charge or report sales tax. This alone could save customers TONS of cash, especially if they live in a state with high sales tax

Just makes sense doesn’t it? All this convience and unlimited movie streaming for just $79 a year.  I think a lot of people are going to buy in.

Amazon recently announced some new programs that are sure to spur sales.  They just announced an Android app store that will launch later this year.  Developers will be able to sell their apps to millions of Android users on Amazons site.  Amazon also partnered with Facebook to introduce social advertising.  Facebook users will receive Amazon product recommendations based on their friends tastes and their own interests.  They will also be offered gift buying suggestions for their friends based on their published interests.

Amazon stock is not cheap. It currently trades at a whopping 85x earnings.  However it recovered very quickly from a post-earnings correction and has re-established a strong uptrend.

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