Amazon: The Retail Killer

Hang on for a minute...we're trying to find some more stories you might like.


Email This Story






Five years ago Amazon Inc. was only hovering around $300 per share. This was considered a lot of money per share but it is nothing compared to what a share of Amazon is today, at a whopping average of $1,800 per share, but questions still stand: how did they get to be one of the most successful businesses today and, which opponents did they knock out of the way on their pathway to success?

Before one can truly understand what this means for the modern world, we need to learn a little bit more about stocks. It all starts back in the 1600s when the Dutch East Indian Company, started giving away parts of their company in exchange for money, and if the company would do well some of the investors(the people who gave them money) would earn a small percentage of what they made. The companies are sold in shares, people will buy shares when the company isn’t doing well, therefore the stock value is low and cheap. Furthermore, when the company starts losing more money the investors will lose their money too, because they’re partial owners so they’ll sell their share or shares, to make as much profit as possible. Others can invest in small companies that have lots of potential, then wait for the shares to become expensive and sell, making a good profit. Many people have dedicated most of their lives trying to figure out when to invest and when to sell. The trick is that we want to buy when the stock is low and sell when the stock is high.

        It is known throughout time that humans just want to do everything as convenient and efficient as possible, and the secret to Amazon is taking this philosophy and manipulating it to make money. If people had the option to go out and go to the mall, with only get a couple of  selections, or stay at home and get hundreds of selections with reviews, and good prices? People usually default to the second option, and Amazon provides this ease and comfort. Many who do choose option 1 that they need the supplies that second, but in the last year, Amazon has changed some of the delivery options. They have recently changed their prime(free for members) delivery to change to one day delivery, which makes a big difference. Now with all of these bonuses to shopping online does one really have to go out and go shopping?

         Simply put, stock does up due to, because people just keep on getting lazier and lazier. When people invest in stock, they want the company to do really well and make more money so they can make a bigger profit. Amazon’s stock has gone way up because people are continuously using it and trading shares making the company cost more. What if everyone is now using Amazon, then what will happen to the other competitors?

J.C.Penney was one of Amazon’s biggest competitors; they were always a reliable company with thousands of stores around the U.S. We can see by comparing the growth of the two companies, Amazon and J.C.Penney, and see that even five years ago J.C.Penney was not doing so well, with $7.11 per share. Don’t forget to keep in mind that the value of a company isn’t all about the cost per share. It was trading around 10 million shares per day, which might seem mind blowing, but is only average for a company the size of J.C.Penney. Now in 2019 it is only trading 7.13 million shares per day and is a penny stock, a stock that is around a dollar. Penny stocks are usually correlated with small public companies, which again shows us how far this once mighty company, has fallen. Let’s compare these stock prices to Amazon. In 2015, Amazon was trading at about $300 per share with 21.28 million shares trading per day, and today, it is trading at $1,800 per share with 2.77 million shares traded per day. You may be asking, “Wait a minute, if Amazon is such a big company, why are they only trading 2.77 million shares present day?” The answer to that question is simple: the Amazon feud has past.

 In other words, the very exclusive golden opportunity, or arbitrage, to invest in Amazon when it was cheap and relatively little known is gone. Only the best investors can sense when it is a good time to invest in companies like Amazon. It wouldn’t make any sense to invest in it today because you wouldn’t make a profit like the investors would make if they invested in 2015 and sold the stock today. Even if you held onto one share, you would still make a $1,500 profit. Imagine people who bought millions of shares! Another question you might be asking is “If you held onto it and didn’t sell it, wouldn’t you make all your money back in dividends?” Another simple answer: Amazon doesn’t pay dividends, despite having a market cap over $800 billion. 

 

To sum it up, people don’t want to actually take time to move around, I mean who would want to? Therefore, Amazon is using that human weakness, to make stuplendus amounts of money, causing other competitors to go down.  As unfortunate as it is that lots of other retail stocks are going down, it shows a valuable moral: that you must learn to adapt in life. Companies like Apple, keep on coming out with new models, appealing to new generations of people. Although companies such as Gap, Tesla and Victoria’s Secret are among nearly 5,000 store closings already in 2019. If one is thinking about investing in stock think about which company, has a future, which company continuously pleases their customers, and which companies are adapting to the modern world, and can lead us into the 21th century.

 

Print Friendly, PDF & Email