Amazon is one of the largest companies in the world despite its humble beginnings as an online book delivery service. Since then, it’s reached never-before-seen heights and cleared the $1 trillion club, which is quite a prestigious achievement.
Still, things aren’t all rosy for Amazon, especially after the last few quarters they’ve had. Today, we are going to be taking a look at Amazon’s stock to better understand its current price, plus why it’s so expensive. Let’s get started.
How Much is Amazon Stock Right Now?
Currently, Amazon’s share price is floating around the $90 mark, the lowest it’s been for quite some time. In fact, the last time that Amazon was hitting these numbers was way back in pre-pandemic land, specifically around March 2020.
Although Amazon’s current share price is dangerously close to its 5-year low, it’s probably not that surprising. In fact, some say it’s expected. Amazon has been on a tear since 2009 when it began a climb that would go pretty much unheeded until the massive drop-offs it’s currently experiencing right now. While all investors would love to see a chart exclusively up and to the right, few companies have been able to sustain such growth as well as Amazon has.
Amazon’s All-Time Pandemic Highs
In March 2020, the first twinklings of what the pandemic would turn into began to rear their heads. Within a few months, the entire world would be locked in their homes, reliant on the online mass-delivery system to order their groceries, supplies, and more. Additionally, content consumption (people watching and streaming from home) experienced meteoric rises. If there was ever a company poised to take advantage of a world in need of groceries and content delivered to their homes, it was Amazon.
That convenient reality happened to coincide with one of the fastest share price increases that the company had ever seen. In March 2020, Amazon was around $90, and by July 2021, the company had reached a new all-time high (ATH) of over $180, a 100% increase.
As we all know though, the perpetual bull market — which is a market trending towards growth — wasn’t here forever.
A Reality Check
Eventually, the market would correct itself. This time around, the correction came (and is still here) in the form of double-digit inflation, skyrocketing interest rates, and global fear and instability. The e-commerce market was inevitably going to take a hit. For Amazon, this “hit” took the form of increased costs and less consumer demand resulting in some pretty soft numbers compared to what things had been the years before.
Eventually, the share price began reflecting some of these slipping figures, bringing us to where we are today. Amazon is sitting where it was in March 2020, with an almost 100% drop in share price since its ATH during the pandemic.
Why is Amazon Stock So Expensive?
Well, frankly, Amazon stock is probably less expensive than it will be in the future.
The company is currently experiencing a hangover from the pandemic era and is seeing slipping figures in its e-commerce segment. Since its e-commerce segment makes up such a large portion of Amazon’s income, it’s no wonder that figures slipped when consumers pulled back during the second half of 2022.
Even still, other pies that Amazon has a finger in continued to grow. Their advertising and AWS (cloud computing services) are still growing each year and are making up more and more of the net income the company is bringing in. The stock sell-off during the past few quarters is mostly a reaction to a dip in e-commerce income, not in any of the other core businesses that help keep the Amazon train running.
Although Amazon stock is more expensive than some stocks, its current price is probably pretty fair. Asking the question of price during the height of the pandemic may get you a different answer, but currently, it looks like it might end up being a steal. There is still some market instability going into Q4 2022, but things will eventually iron out.
If you had to guess who will still be around in a few years to deliver your online shopping, Amazon will almost certainly be on that list. With that in mind, this temporary price reduction can actually be viewed as more of a good thing than a bad one.
Amazon is currently sitting at a share price of around $90, a nearly 50% decrease from the share price last year.
This is likely due to consumer pullback stemming from high inflation and interest rates directly impacting Amazon’s bottom line. Still, other core businesses that Amazon operates are doing fine. Amazon stock is actually cheaper than it has been for a while and, comparably, isn’t that expensive. When was the last time you bought something for $90?
A few important things to note about Amazon’s share price:
- Amazon’s primary revenue stream, e-commerce, slipped a bit in a pretty clear reflection of the global market, not necessarily anything Amazon did.
- Other core businesses that Amazon has (AWS and advertising) are still doing fine.
- When the market eventually upturns, Amazon will likely begin its climb again.
- With the fundamentals of the company remaining unchanged and a positive outlook in the next few years, Amazon is probably on a bit of a sale right now.
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