Amazon Stock Analysis

3 min read
Financial Analysis of Amazon| Foreign stock Analysis

Foreign Stock Analysis – Amazon


Previously we have analysed two foreign tech giants – Apple and Microsoft. In this blog, let us analyse another popular foreign stock i.e Amazon doubling its stock price in last 2 years and has reached a market capitalization of $1.6 trillion.

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Amazon Stock Analysis

Stock Price over last 23 years

Amazon stock analysis
Amazon stock performance
  • As seen, stock price has grown at quite a faster pace from 2018. It currently has allocation of 4.8% in S&P 500 index and 10.4% in NASDAQ 100 which is quite commendable.

Growth Trends

Total Revenue
Amazon stock analysis
Amazon revenue growth
  • As seen, company is continuously growing and has registered a stellar CAGR of 27% over 10 year period. Company is displaying good growth even at bigger bases in the previous years.
Pre-Tax Profit, Net Profit and PAT Margin
Amazon stock analysis
Amazon Profit growth
  • As seen, company started earning substantial profits in 2016-2017. Prior to that profit was negligible and company was clearly in growth stage, wherein there were huge investments being made in the business.
  • Post 2017, company’s profits shot up and became more than 3x from its previous level. This resulted in healthy profit margins and it was reflected in company’s stock performance.

Quarterly Revenue and PAT trend

Amazon stock analysis
Quarterly revenue and PAT trend
  • Company is posting strong performance on QoQ basis and has posted healthy profits to the tune of ~$14 bn in FY20 itself.

Revenue Mix (%)

Amazon stock analysis
Amazon Revenue Mix (%)
  • As seen, North America has highest contribution in the revenue mix, followed by international revenues and remaining from AWS.
  • As seen, revenue from North America has become ~3x , revenue from other international locations has grown ~2x and that of AWS has grown ~ 4x in the last 5 years.

Operating Income Mix (%)

Amazon stock analysis
Amazon Op. Income Mix (%)
  • As seen here, Amazon’s AWS business is very much profitable and has grown ~6x over the last 5 years. Similarly, North America business has shown healthy growth. However, international business is still loss making and has not yet achieved operating – break-even.

Segment Breakdown

Amazon stock analysis
Segment wise breakdown of revenues
  • As seen, company is far more than an online store as ~49% of revenues are contributed by physical stores, subscription services, third party services , etc.
  • Let us take a look at the competitors of Amazon in each of these segments.
Amazon stock analysis
Amazon competitors

Amazon Web Services (AWS)

Amazon stock analysis
AWS Revenue and Operating Margin (%)
  • This segment seems to be the dark horse segment for company with stellar 5 year CAGR of 47% and operating profit margins to the tune of 25-26% in 2019.
  • It is mainly because AWS did not have any competitor in the market since its launch for 4-5 years, which led to strong market share gains resulting in robust revenue and profit margins.
Amazon stock analysis
Amazon Web Services (AWS) Market share

R&D expense

Amazon stock analysis
Amazon R&D expense
  • As seen , company spends a handsome amount on its research and development expense, which accounts for ~13% of the sales.
  • Also, R&D expense as a % of gross sales is continuously increasing over the last decade.
  • Healthy R&D expense is also one of the main reasons behind amazon’s innovative product ideas and impeccable services.

Key Financial Ratios

Amazon stock analysis
Amazon key financial ratios

Product Launches

Amazon stock analysis
New Product Launches

Acquisitions over the years

Amazon stock analysis
Number of acquisitions
  • As seen, company is consistently acquiring companies over the last decade.
  • Their largest acquisition was in 2017 worth $13.7 bn for a grocery store chain named – Whole Foods.
Amazon stock analysis
Biggest acquisitions
Amazon stock analysis
Amazon recent acquisitions


Amazon seems to be a perfect blend on retail and technology sector. Amazon is a pioneer in making e-commerce scalable across different geographies with commendable market shares. Their robust spend on R&D helps the company to launch new innovative products and services, which in turn open new markets for them.

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