Prime is about to become Stickier


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E-commerce giant AmazonAMZN) unveiled some pretty exciting innovations that could help it make a push toward the $2 trillion market cap mark — a level that was within reach less than a year ago.

Amazon Web Services is growing at an unstoppable pace. New services like “Buy with Amazon Prime”, which opens up Amazon’s logistics and payment solutions to the rest of the world, are a good example.

The shares have been floundering in tandem with the rest of the wider market over the last few months. Retail may be the one to suffer as the consumer recession looms. Even though the macro picture may not be very encouraging, it is difficult to predict which of the most disruptive forces will emerge in tech.

Amazon’s Prime Service to Come into Its Prime

It is true that logistics can be very capital-intensive. Amazon has been making the right investments over the years. It’s even made more recent quarters than necessary to be able to offer storage or timely transport as a service.

Amazon could be the logistics market’s answer to the public cloud. Amazon started out as an in-house cloud provider before opening its doors to the general public.

I believe “Buy with Prime”, a model that is fundamentally disrupting, could be adopted by other Prime customers and retailers. What person wouldn’t love the ease of 2-day shipping and fast payments?

The service provides a double punch to all other payment companies who don’t have the ability to offer what Amazon does. In fact, there are more payment buttons on commerce sites than ever before. Promising fast delivery is key to getting shoppers’ clicks.

Prime isn’t just about Prime delivery to other sites. There are many perks that seem to be increasing, including GrubHub was recently acquired by Amazon. alongside announcing the inclusion of one year of GrubHub+ for its Prime members in the U.S. market.

Amazon’s entry into food delivery makes perfect sense. The disruptive effect of Amazon’s ecommerce empire will be felt in the food delivery sector over the next 12 months.

Markets Ready to Be Disrupted

Amazon might be the first to enter a market without a single firm forming a barrier around it’s business. Amazon is a deep-pocketed company that has used its size to its advantage more than any other firm. However, high capital costs are not an issue.

Amazon can thrive in the following key areas: food delivery, physical retail and digital payments.

Amazon could be more aggressive as interest rates rise and investors are less willing to invest in firms that spend money to remain competitive. Amazon will take advantage of any opportunity to squeeze smaller rivals, particularly those in the small-sized sector, if it can.

Amazon could be favored in a high-rate environment where money is scarce, as they seek to increase their disruptive capabilities.

Amazon can give its customers a great deal for their money and make it stronger than ever to weather any economic downturn.

AMZN Takes on Wall Street

AMZN stock is a Strong Buy when we look at Wall Street. There are 38 Buy recommendations, one Hold and 39 analyst ratings.

Amazon’s average price target of $176.38 implies a potential upside of 55%. The price targets of analysts range from $107.00 per Share to $270.00 Per Share.

AMZN Smart Score Rating

Interestingly, AMZN’s Smart Score is 8/10 on TipRanks. This suggests that it will likely outperform the market in the future, which is consistent with analysts’ bullish stance.

The Bottom Line

Amazon’s disruptive abilities have not diminished. Although a recession could have a significant impact on the next quarters, Prime Day, and other interesting additions to Prime could help the firm move forward as many other retailers are struggling.

It is becoming more difficult to keep up the pace with Amazon, the e-commerce kingpin. Amazon will apply more pressure to market incumbents who can’t form any kind of moat, with rates rising and growth slowing down.

Amazon is pushing the gas pedal, which is why Wall Street analysts remain so bullish on Amazon despite the 40% decline in stock prices.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ The Best Stocks to Purchase, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The views and opinions expressed in this article are the writer’s. They do not represent the views or opinions of TipRanks. The author did not hold any positions in any of these securities at the time of publication.


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