9 Top Reasons to Buy Amazon Stock and Not to Sell It

For the past few years, Amazon stock has continued to sky rocket and has managed to beat the returns of some of its top competitors. It continues its winning ways year after year and this is reflected in its share price. The mammoth company is growing in size every year and is expanding its operations and improving its services consistently to get a greater share of the market. Even though Amazon is a huge company, it is churning out stock gains as if it is a smaller growth stock. If you are still wondering whether to buy Amazon stock or not, here are some of the top reasons to consider doing so:

Reason 1- It is led by a founder

Amazon was founded in 1994 by its current Chief Executive Officer, Jeff Bezos. Thus, he is intimately aware of the company and its workings. Moreover, a founder CEO is far more likely to care about what happens to the company that even the best of the non-founder CEOs could ever do. As a matter of fact, a number of studies have been conducted into the matter and they show that companies that are led by founders tend to perform much better in the stock market, as evident in the growth of Amazon stock.

Reason 2- The founder has a lot of skin in the game

As of November 14, 2018, the number of Amazon shares owned by Jeff Bezos were 78.89 million, which gives him about 10.1% stake in the firm. The market value of his Amazon stock varies, depending on the closing price. However, it wouldn’t be wrong to say that the interests of the CEO of the company are aligned with yours if you do decide to purchase some Amazon stock.

Reason 3- Amazon focuses obsessively on its customers

The mission statement of the company dictates that they are fully focused on their customers and Bezos has emphasized this fact time and time again. The company’s focus on keeping its customers happy helps in ensuring that the current customers come back for more and also works in attracting new customers to it. Suffice it to say, the ecommerce giant will keep on growing and this will have a positive impact on Amazon stock.

Reason 4- It has a powerful moat

There is no doubt that Amazon has a number of notable advantages that allow it to keep its competitors at bay. But, the biggest and most powerful moat is none other than its extensive fulfillment center network in which it has poured a lot of money. This network will play a very important role in Amazon’s ability in delivering orders in a cost-effective and speedy manner.

Currently, there are 119 fulfillment centers that Amazon has in the US and it is planning to build 28 more. These are huge multimillion dollar facilities, which are at least 13 times the size of a regular football field. It is certainly cost-prohibitive for any competitor to come close to Amazon, which means that Amazon stock is most likely to continue growing without any threats.

Reason 5- The company’s business model is built to promote growth

The primary cash flow machine for the company is its cloud computing business, Amazon Web Services. The ecommerce giant uses most of its massive cash flow for expanding its ecommerce infrastructure and also for expanding into new areas. The potential for growth will also help the Amazon stock to rise.

Reason 6- It has a ‘sticky’ business model

The business model adopted by Amazon is ‘sticky’, which means that it assists the company in developing long-lasting and tight relationships with its clientele. This prevents its customers from switching to its competitors. The Amazon prime membership turned out to be super successful as it provides ecommerce clients free two day shipping and numerous other benefits for $99, not very different from superglue. According to statistics, the number of Prime subscribers increased from 25 million in 2013 to a huge number of 90 million in 2017, which gave a solid boost to Amazon stock.

Apart from that, the website also incorporates features, which makes it incredibly convenient for people the longer they remain customers. It saves all their past orders and this makes reordering similar items or the same ones a snap. It also does a wonderful job in making recommendations based on your past orders.

Reason 7- There is room for growth in the shopping trend

Ecommerce sales have been growing rather rapidly as a percentage of the total retail sales in the United States. They have more than doubled in the past few years and this figure is expected to increase even more in the next few years, which will do wonders for Amazon stock. Since Amazon is the ecommerce titan in the country, it is poised to earn the most profits from this future growth. While it is highly unlikely for ecommerce sales to completely takeover retail sales, there is certainly plenty of potential that Amazon can take advantage of.

Reason 8- It can benefit from international growth opportunities

A considerable part of Amazon’s ecommerce sales are from international markets. Majority may still be from the US, but the company’s international sales are also on the rise. This means that there are plenty of growth opportunities in international waters and they are quite massive. As the company explores these options, Amazon stock will benefit from it.

Reason 9: The company has a culture for innovation

Over the years, the ecommerce giant has expanded its interests and has developed and introduced different consumer electronic devices. Some of these devices have been absolute winners like the Echo smart speaker for homes and the Kindle e-reader, while others may have failed like the Fire smartphone. As the company continues to innovate and develop new products, it will grow and expand and this will work wonders for the Amazon stock.

These are some of the top reasons to buy Amazon stock because you will reap the returns from it for a long time.