The festive season at the end of 2016 and the start of 2017 saw the electronic retail market achieve its most successful position yet in opposition to the more traditional forms of retailing; against a backdrop like that it is not surprising to note that Amazon once again displayed the dominant position it holds as the foremost e-retailer in the world. This busy Christmas and New Year was reflected by the sharp rise in Amazon stock prices when the markets reopened in the New Year, with Amazon shares rising by 6% in just six days! It is true that this gain offset against losses from the last quarter of 2016, but even with that taken into account, Amazon’s future in 2017 looked rosy, with analysts predicting that shares would break the $1000 barrier some time later in the year. Other analysts pondered the question of whether to buy Amazon shares against this predicted future performance, or whether to sell. Not surprisingly the general consensus in those early months was to buy shares in the giant retail company. Indeed many were quite emphatic in their advice to buy shares as keepers.
It seems appropriate somehow to hear such advice about Amazon shares since the avowed objective of the company is and always has been to become the most consumer-centric business in the world. From its origins through the development of such runaway successes as Amazon Prime to its more recent initiatives, such as Alexa, Amazon Prime Video and its sky warehousing, drone delivery, digital assistance and other emerging technologies, Amazon has always sought to be at the forefront of innovation, if that innovation helps it become more responsive to its customers. Indeed the year 2016 saw Amazon’s patent numbers increase by a hefty 46%. When we consider that Amazon has a history of forging ahead even when one its projects fails, we may be assured that the company will continue to innovate. These developments will not always be successful, but then again no company or individual has ever enjoyed a hundred percent success rate. The sheer weight of innovation, however, seems to almost ensure that Amazon has more winners in the pipeline, and this means that, short term variations aside, the price of Amazon shares will continue to be healthy.
One of the variations that have been causing some reconsiderations on the future predictions for the price of Amazon shares has been the company’s recent heavy investment in infrastructure, which Credit Suisse predicted would cause a squeeze on profits some time to start in the middle of 2017. Credit Suisse thought strongly enough about this matter to reduce its predicted price for Amazon from $1,000 to $950.Other observers, however, noted that this information had little or no effect on their long term predictions, as they felt that the infrastructure investment would only ultimately add to the attractiveness of Amazon shares as an investment. The first half of 2017 certainly seemed to be a time to buy shares on Amazon.
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