Amazon (AMZN, $1,723.42) keen on adopting a business model like eBay’s (EBAY, $36.64) than Walmart’s (WMT, $102.20)
When consumers buy products from Amazon, they are actually buying from third party sellers and not exactly from Amazon. But that’s rather the good news. Third-party sellers on Amazon account for 58% of gross merchandise volume bought on Amazon’s website.
Amazon is willing to sell more items from third-party sellers as it is more profitable and involve less risk for Amazon. In fact, Amazon has plans to stop making bulk wholesale orders. Instead, it wants to encourage small vendors to use their third-party selling services.
Therefore, Amazon wants to become more like eBay and less like Walmart.
As an online marketplace, eBay is merely responsible for bringing contact sellers with the buyers. It takes a commission on every sale, charges sellers for additional perks like advertising their product listings and doesn't have to store or ship any inventory.
This is indeed a very profitable business model as eBay posted a 23% operating margin in Q1 in comparison to Amazon’s 7.4% and Walmart’s only 4%.
But Amazon has more scale than eBay. eBay's gross merchandise volume for 2018 was about $94.6 billion while Amazon's third-party merchants sold $160 billion. And that number is growing much more quickly than at eBay.
But Amazon has some other unique advantages that keep it at the cutting edge of online marketing. Case-in-point: Amazon’s fulfillment service offers storage and shipping services to sellers and its Prime shipping service has been upgraded from two-day to one-day shipping service.
This fulfilment service is instrumental in transitioning products from small vendors directly to customers. It even fulfils orders from other marketplaces. And since Amazon accounts for the major share in the online marketing scene, vendors usually don’t leave its platform.
Moving vendors to third-party seller services also help in improving the margins for Amazon as it can demand a greater cut in commissions and also does not need to manage vendor relationships or its inventory.
Amazon is hence becoming more like an eBay marketplace than a retailer like Walmart.
AMZN in downward trend: price may drop because broke its higher Bollinger Band on May 10, 2023
AMZN broke above its upper Bollinger Band on May 10, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options. The A.I.dvisor looked at 47 similar instances where the stock broke above the upper band. In of the 47 cases the stock fell afterwards. This puts the odds of success at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The RSI Oscillator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AMZN declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 09, 2023. You may want to consider a long position or call options on AMZN as a result. In of 80 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for AMZN just turned positive on May 10, 2023. Looking at past instances where AMZN's MACD turned positive, the stock continued to rise in of 43 cases over the following month. The odds of a continued upward trend are .
The 50-day moving average for AMZN moved above the 200-day moving average on May 26, 2023. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AMZN advanced for three days, in of 345 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 251 cases where AMZN Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. AMZN’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 95, placing this stock slightly better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (7.974) is normal, around the industry mean (18.928). AMZN's P/E Ratio (285.714) is considerably higher than the industry average of (73.881). Projected Growth (PEG Ratio) (4.265) is also within normal values, averaging (2.626). Dividend Yield (0.000) settles around the average of (0.038) among similar stocks. P/S Ratio (2.341) is also within normal values, averaging (8.439).
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