Why Amazon Stock Was Gaining This Week

view original post



Why Amazon Stock Was Gaining This Week


© Provided by The Motley Fool
Why Amazon Stock Was Gaining This Week

What happened

After a dismal 2022, Amazon (NASDAQ: AMZN) stock is off to a hot start this year.

Loading...

Load Error

Through Thursday afternoon, shares of the tech giant were up 10.9% this week, according to data from S&P Global Market Intelligence, due primarily to an expansion of its Buy with Prime program and a rising tide in stocks. Investors seem to be betting that the market bottom could be in after last week’s solid jobs report and the Consumer Price Index today showing inflation continues to ease.

So what

The main news driving the stock higher this week was the announcement about Buy with Prime, which gives Prime members the opportunity to use Prime benefits like free shipping and returns on sites other than Amazon.

The company launched the program in April, but it was only open to online retailers that already had a relationship with Amazon and used its fulfillment services.

Now, the company said starting Jan. 31, Buy with Prime will be open to all eligible U.S. merchants.

Early results show that Prime badge had a positive impact on retailers that used it, lifting shopping conversions by 25% on average. Amazon bulls believe Buy with Prime could help the company take business from Shopify and significantly expand its addressable market as it can now get a share of potentially every e-commerce company’s sales.

Macro news also supported the stock’s rebound as the jobs and inflation reports both led investors to believe that inflation will soon normalize and that an end to the Federal Reserve’s rate hikes could come soon.

Now what

Whether Buy with Prime will move the needle for Amazon remains to be seen. The idea sounds promising, but the company has also been retrenching, laying off 18,000 corporate workers and closing warehouses. Additionally, Amazon’s customer satisfaction scores have declined, and some Prime customers say the label has become meaningless as deliveries take much longer than they used to.

Still, after last year’s sharp decline, the stock looks cheap, especially if the economy can avoid a significant recession. If the macroeconomic data continues to be favorable, expect the rebound to continue.

SPONSORED:

Find out why Amazon.com is one of the 10 best stocks to buy now

Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed their ten top stock picks for investors to buy right now. Amazon.com is on the list — but there are nine others you may be overlooking.

Click here to get access to the full list!

 

*Stock Advisor returns as of January 9, 2023

 

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon.com and Shopify. The Motley Fool has positions in and recommends Amazon.com and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

Continue Reading