Amazon Analyst Report. Amazon’s Company Overview. Recent Developments

Amazon Analysis Report
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Amazon Analysis Report
Recommendation
Amazon’s performance is high as compared to competitors like Microsoft and Alibaba Corporation. Recently, the company lost a $10 billion cloud computing contract. However, continuous increase in revenues from Amazon Web Services (AWS) helps the company is achievement of sustainable competitive advantage. The fair share price of Amazon is $1445.38 as per the results of valuation using P/E multiple (See Appendix). It is recommended that investment in Amazon’s stock is highly suitable for investors with an objective of generating high rate of returns. Amazon’s beta value is 1.57, therefore; investors can use this high volatile stock for diversifying the investment portfolio with low-risk stocks.
Amazon’s Company Overview
Amazon is the world’s largest e-commerce company which founded in 1995, and it is in the form of business to customers. Company’s revenue scope includes but is not limited to books, electronic products, household products, etc. In general, every product sale in a physical store can be bought on Amazon (Reuters, 2019). However, Amazon’s revenue is not only from online stores, but also comes from its physical stores, third-party seller services, Amazon Web Services (AWS), subscription services, and others. In the year 2018, Amazon became the second U.S. public company to reach a valuation of $1 trillion (Money Watch, 2018). Apple is the first company to cross the $1 trillion valuations (Money Watch, 2018). Overall, Amazon’s performance has improved a lot in recent years and it is expected to increase further in future.
Recent Developments
In addition, Amazon missed a 10 billion dollars’ cloud computing contract from the Pentagon recently. The US Department of Defense handed the project over to Microsoft (Warren, 2019). However, before the bidding results came out, the public generally believed that Amazon could get the contract. Firstly, Amazon has better cloud computing services than Microsoft (Warren, 2019). Secondly, Amazon has previously won the CIA’s cloud computing contract, which means that Amazon’s “federal security classification level” is higher than its competitors. But the results were unexpected. Hence, Amazon issued a statement on November 14, it claimed the transaction had errors and unquestionable prejudice and plans to file a formal legal complaint to protest the decision (Duffy, 2019). This contract made Microsoft’s co-founder Bill Gates beats Amazon’s CEO, Jeff Bezos, and return to the position of the wealthiest in the world. Also, it led Amazon’s share price declined by 2% from November 14.
Amazon Inc. Financial Indicators
Amazon financial indicators are mentioned in table below.
Table 1: Amazon’s Financial indicators
Source: (Yahoo Finance, 2019)
Share price

$1745.31

Enterprise Value

$928,630.8 million

Trading P/E

77.35

Revenues

$177.9 billion in 2017$232.9 billion in 2018

Forward P/E

64.03

Beta

1.57

Return on equity

23.73%

Profit margin

4....