Millions of people in the US and around the world have been forced to stay at home and shelter in place under the guise of limiting the spread of coronavirus. This has led to an increase in interest and demand in online shopping and a boom in the e-commerce industry.
So, it makes sense that one of the largest e-commerce companies in the world, Amazon, would be cashing in on this. Apparently, the company is expected to see an additional 16% growth by the end of this year.
This is according to a well-known Wall Street bull which increased its Amazon price target from $2,750 to $3,700. This is the highest price target in all of Wall Street and is equal to a 16% increase in Amazon’s trading price.
Meanwhile, Amazon shares saw a 4.5% increase on Monday’s intraday trading, and this is prior to paring gains. According to a group of John Blackledge-led analysts writing into the Monday note, Amazon is expected to continue with its top-line acceleration in the near future.
Blackledge expects Amazon to finish strong throughout 2020, way over expectations. Some of the key drivers that add to Amazon’s projected success include accelerated e-commerce growth, increased subscriptions, advertising, and AWS.
In order to come up with these optimistic projections, Cowen increased its e-commerce and advertising estimates, thereby projecting forward to Amazon’s discounted cash flow of 2021.
Amazon’s shares have increased in value and price by over 75% this year, giving rise to increased confidence in the prospects of the tech giant’s continued success over the next several months.
This evaluation makes sense when you consider the fact that the demand for online shopping will only increase from here on out, leading to a more robust e-commerce sector, which a lot of savvy investors are looking for stability.
A continued pandemic situation spells good news for Amazon investors because it can only guarantee continued growth in the e-commerce sector, with Amazon leading the pack in terms of demand and stock prices.
According to experts Amazon’s e-commerce growth in recent months was mainly driven by an increased demand for essential products as well as an increase in subscription revenue, advertising and the ever-popular Prime 1-Day shipping initiative.
Cowen expects these different elements to continue along the same track well into the second-quarter of 2021, especially as the US sees a pattern of staggered re-openings that are set to continue due to fluctuations in COVID-19 cases.
Blackledge and his team also believe that investors will do well to look beyond second-quarter investments to the increased demand that’ll come from COVID-19 related expenses which are expected to reach a whopping $4 billion. This includes pandemic relief efforts, testing, safety equipment, elevated wages, and headcount.
For those who ignored experts’ advice to jump in and invest in e-commerce stock early on in the pandemic, it’s never too late to jump onto a moving gravy train.