Is it safe to invest in Amazon?

Many times we have heard about the company named Amazon for various reasons, be it for its service, its distribution network, or its rapid growth in the market. Today we will focus on deciding whether or not it is safe to make an investment in the shares of this company.

If you have ever thought about starting to invest in stocks or already have a little experience in it, you will know that whatever your risk profile, this type of investment usually generates high returns. However, the most frequent fear that arises when investing in one stock or another is to think that we could lose our money, as there is always a risk and we cannot fully guarantee the outcome of the market. Precisely for this reason, it is important to identify in which companies it is more or less safe to invest.

¿Es seguro invertir en Amazon?

Amazon.com, Inc. is an online sales company, that is, what we also know as electronic commerce, since all its sales transactions are carried out exclusively electronically.

This company started as an online bookstore and then diversified its range of products, to the point that today, almost everything we want to buy can be found within Amazon. This jump has generated a great increase in its profits that have reached over 1,400 million, thus making it the first electronic sales company in the world market.

But this is not all, over the years, Amazon has made other acquisitions diversifying and growing more and more. In this sense, it is not difficult to imagine that the value of the entire company has also been affected favorably. This has meant a significant gain for all those who decided to acquire Amazon shares at a certain time .

Identifying if it is safe to invest in a company will give us the peace of mind of knowing that we are going to choose the best options in the market to obtain greater profitability. For this reason, we will delve deeper into it below, taking the case of the Amazon company as an example, and we will analyze some factors that will allow us to conclude whether or not it is safe to invest in this company.

1. Growth opportunities:

At this point, we must observe the behavior of the company projecting ourselves into the future, based on the current and near context. In the case of Amazon, sales have been increasing thanks to the global COVID-19 pandemic, as restrictive measures, confinement, and closed shopping centers still continue in many countries. These ravages are forcing people to stay home and shop more and more online.

This opportunity to increase sales has represented a financial strength for the company and allows diagnosing that for the near future in which the precautions to avoid contagion will still continue, this increase in sales would increase even more or at least it would stay at the current high volume. One of the reports made by this company shows that, compared to the previous year, sales growth occurred by 32% and therefore, investor expectations have increased, driving a huge rally in Amazon shares reaching a value 70% higher than in 2019..

2. Stock price history:

This point is essential to determine the volatility of a company’s shares. In the case of Amazon, which has been a publicly traded company for several years, the information is readily available and easy to analyze. We observe that, in general, the price of the shares has been rising more and more and continues in that trend. In that sense, this point also assures us that the evolution is favorable for investors who bet on Amazon.

3. Development of the company in the market:

After analyzing the two previous points, an important part will also be to verify the business actions carried out by the leaders and officials of the company, that is, how the company’s decisions are being made and managing the business, for this it is important to be aware of the news and reports of the company.

For Amazon, this information is available and as previously mentioned, the company has been diversifying its business in an intelligent way, so that its income not only comes from electronic commerce but currently, also from the “Prime” memberships that already has more than 150 million members and other services in which Amazon behaves as a provider of infrastructure services in the cloud for other companies. This allows us to determine that the management of the company is being strategically guided and that generates confidence in investors, qualifying any investment in Amazon as profitable.

In conclusion, observing the behavior of these three factors allows us to affirm that investing in Amazon is safe.

In another article we will talk about the best way to invest in this company, if it is advisable to manage it on our own or if it is preferable to have the guidance of an expert to obtain a successful investment. However, for the moment, it is clear to us that the investments made in this company today could definitely bring you very attractive returns and apparently if you make that decision, you have to hurry before it continues to increase its value and make it more difficult to join in this growth.