Market News & Analysis


Top Story

Amazon A Buy?

The number of global coronavirus cases has reached 1 million. Europe, with the exception of Sweden, is on lock down and state by state the US is imposing stay at home directives. These lock down and social distancing measures have resulted in demand for goods and services evaporating overnight. Millions of businesses are collapsing. 


Within this mayhem, there are some stocks which are outperforming the market, Amazon is one of them. 

E-commerce
E-commerce was already a big business before coronavirus. However, Amazon has been a lifeline for many in isolation and will have boosted the company’s sales significantly. Business is booming. The e-commerce powerhouse has announced that it will take on an additional 100,000 workers to staff its fulfillment centres and delivery operations.

Amazon Prime / AWS / Prime Music
It’s not just the online shopping area of the business that stands to benefit from lock down. Amazon Prime’s online Video service and Prime Music are seeing an increasing number of customers. The Amazon Web Services, the leader in cloud services is also helping many businesses work through the coronavirus crisis.

Not Just For Lock Down
There is a good chance that the lock down period will have changed many people’s habits. It will have opened up a new way of shopping for many people. Those that have created accounts for Amazon Prime or Video and Music could well keep the services even after coronavirus passes.

Latest Results
2019 results show that Amazon had a phenomenal year, without any lock down. Sales jumped 20% to $281 billion; EPS shot up 14% after the firm invested heavily in one day shipping. Amazon’s balance sheet is also impressive with $55 billion in cash and $23 billion in long term debt. There are plenty of reserves to weather any economic slowdown.

Chart thoughts
Since the coronavirus induced sell off took hold mid-February the broader US market, the S&P is trading down 24%. Amazon is down just 8%. Since its March low, the S&P has rallied 15% whilst Amazon has jumped 19% over the same period.


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.