How to Trade Amazon’s Potential 57% Surge Higher
While Amazon’s (AMZN) share price has already surged more than 135% higher since the lows of the pandemic, Wallstreet is turning increasingly bullish on the e-commerce giant’s stock price.
Data from analysts polled by Nasdaq.com, offering a 12-month price target for AMZN, shows the highest estimate at $5,000 per share, with an average price target of $4,196.
Both targets represent significant upside potential from current levels, so it’s a stock to watch.
|Symbol for Invest.MT5 Account:||AMZN|
|Symbol for Trade.MT5 Account:||#AMZN CFD|
|Date of Idea:||22 October 2021|
|Time Line:||6 - 12 months|
|Stop Loss Level:||$3,160|
|Position Size:||Max 2%|
* The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
* The Trade.MT5 account allows you to speculate on the price direction of stocks and shares using CFDs. This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
Source: Admirals Contract Specification
Why Trade Amazon?
There are a variety of reasons why Wallstreet is turning increasingly bullish on the stock.
Reason 1: Seasonal upside due to holidays
On average, November is seasonally the most bullish month for Amazon’s stock price. Not only are there more shoppers using Amazon for Thanksgiving and Christmas holiday shopping, but there is also a surge in revenue due to the Prime Day sales.
Reason 2: Increase in Prime subscription
There are rumours circulating on Wallstreet that Amazon could increase the cost of its Prime subscription service in 2022. A $20 increase across its more than 150 million US Prime members would rake in $3 billion which will go straight to the company’s operating income, helping to lift its pre-tax profit figure.
Reason 3: Plans to hire 55,000 new employees means more growth
One out of every 153 workers in the US is an Amazon employee. That number is set to increase as Amazon announced plans for a massive hiring spree. This means the company is serious about growth which is what investors love to hear.
Reason 4: Amazon is very well diversified
Amazon has positioned itself cleverly in the world’s economic system. While they may have started out as an e-commerce business the company is now a leader in many other hot sectors.
In the last quarter, Amazon’s cloud computing business, Amazon Web Services (AWS), accounted for nearly 15% of the company’s total revenue. The company is also involved in autonomous vehicles, food delivery, grocery stores and internet connectivity.
An Example Trading Idea for Amazon
An example trading idea for Amazon could be as follows:
- Buy the stock on a break above $3,560.00.
- Target the highest estimate of analyst ratings at $5,000.
- Place a protective stop loss at $3,160.
- Keep your risk small at a maximum of 2% of your total account.
- Time Line = 6 – 12 months
- If you buy 1 Amazon share:
- If target is reached = $1,440.00 profit.
- If stop loss reached = $400.00 loss.
Risk management is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade. The example figures above have been calculated using the Admirals Trading Calculator which enables you to view what your profit or loss could be based on the numbers you input – a great tool for traders!
How to Buy Amazon Shares in 4 Steps
With Admirals, you can buy shares in US companies like Amazon with a low commission of just $0.02 per share and a low minimum commission of just $1.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live accounts to open the web platform.
- Search for Amazon at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to buy Amazon stock today! ▼▼▼
Do You See It Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author. If you believe there is a higher chance Amazon’s share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
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