Fundamental Analysis

Amazon Stock Analytics 2021

Main Items for Traders to Consider

Amazon is an American e-commerce corporation operating as part of the Retail Market Sector. In the United States, the stock is traded on the NASDAQ. The beta of the stock is 1.16, which means that if the U.S. market is growing, the growth of the company’s stock will outpace the market.

Let’s evaluate what is happening to the company in terms of risks, the potential for further share price growth, and explore how to invest in Amazon.

The first step is to analyze what’s happening with Amazon’s debt load. In other words, let’s determine the company’s capacity to pay off its debt. In classic fundamental analysis, the debt ratio is calculated as the ratio of all liabilities of the company to the value of its assets. For 2019, Amazon’s debt ratio was 72.4%, and for 2020, 70.9%.

Therefore, we can conclude that the company’s debt burden decreased during the period of 2019-2020. During the past year, the company significantly increased the size of its property, plants, and equipment, which led to an increase in assets and a decrease in the debt ratio. Currently, the company’s debt is not very high, which is a positive factor for investors.


Main Amazon Ratios

Amazon is a big company, but how much is it worth? The market capitalization is $1.62T. The company’s asset value for 2020 was $321.1B. The value of the company’s equity stock was $93.4B.

Additionally, the market valuation of Amazon is more than five times the value of its assets and 17 times the value of its equity. Over the past few years, the company’s capitalization has grown significantly. Moreover, the growth is justified given the strong revenue growth, which gives investors another reason to put their faith in Amazon shares.

The company’s revenue growth rate:

  • 2017-2018: +30.9%
  • 2018-2019: +20.5%
  • 2019-2020: +37.6%

Amazon’s 2020 EBITDA rose by 32.54% and amounted to $48.15B.

By looking at these financial indicators, we can conclude that Amazon clearly has huge potential for more growth.

The company has a very high price to earnings (P/E) ratio, which is common compared to others in the industry. Amazon is a service company and its own funds account for just under 50% of total assets. Therefore, we also need to pay attention to the price to book ratio (P/B) multiplier. In this aspect, the company is slightly ahead of the industry.

Amazon’s ratios:

  • P/E = 60.96 (in the industry = 201.01)
  • P/S = 3.85 (in the industry = 5.56)
  • P/B = 15.62 (in the industry = 16.63)


Other Things to Consider

When analyzing Amazon in terms of profitability. The company’s 5-year average return on equity (ROE) is 23.03% versus the industry which is 2.45%. The return on assets (ROA) is 5.98% versus the industry average of 0.98%. Given that the ROE is significantly ahead of the industry, we can conclude that Amazon’s management works efficiently.

The price of Amazon shares certainly appears overpriced, but the prospects for future capitalization growth remain. This is also the opinion of large investment companies such as Morgan Stanley, which predicts the price of the company’s stock will rise to $6,000 by the end of 2022. Furthermore, Bank of America recommends holding long positions on the stock, and U.S. investment firm Jeffries confirms that upside potential will continue as soon as markets regain certainty.

From a technical analysis point of view, in the short-term time frame of 1 month, the price is traveling in a range between $3000-3050. The stock price has shifted significantly away from its 200 period moving average, which means that there is a probability that the flat, sideways movement will breakout to the downside. In the case of a breakout, a strong level of support is observed at the level of $2050.

Considering that the company does not pay dividends and its capitalization significantly exceeds the value of its assets, the most optimal approach for stock trading is speculation. For example, it is possible to buy Amazon shares at the support level of $3000 and then sell those shares at $3500. In this case, place the Stop Loss just under $3000.



  • Amazon’s revenue has been growing for several years.
  • The company’s profitability is quite high which shows us that the management is effective.
  • The main ratios are lower than in the industry.

Therefore, we think that investments in this stock may be profitable.

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Trade Amazon stock on the Olymp Trade OTP and get outstanding financial results!

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