For new investors, taking on large positions in the stock market can be intimidating or financially impractical. A common method for getting started in investing is to buy single shares of well-known companies that are growing at reasonable rates. A very common choice for this approach is Amazon, the world’s largest eCommerce business.
Here’s what you should know about buying one share of Amazon and whether doing so is a worthwhile use of your investment capital.
Can I Buy 1 Share of Amazon?
Yes, you can buy a single share of Amazon stock. It is permitted at all brokerages.
If you have an active trading account and the money to purchase a share of Amazon, you should be able to buy a single share with no difficulties.
How Do I Buy One Share of Amazon?
To buy a share of Amazon, log into your brokerage account and find the page for Amazon’s ticker symbol AMZN.
From there, you can place an order for one share to be executed at the earliest available opportunity. You can select among market orders, which are placed at the best available price currently or limit orders, which is the maximum you are willing to spend to buy 1 share.
Before buying your share of Amazon, be sure to deposit sufficient funds into your account.
Is it Worth it to Buy One Share of Amazon?
Buying a single share of any stock won’t make you wealthy, but it can be a good way to put small amounts of money to work effectively.
Buying one share of stock is a good way to either start your position in a company or add to it when you don’t have large sums to invest. Assuming the company does well, your single share can still appreciate and become worth a decent amount of money.
As an example, let’s use one of Amazon’s closest competitors, Walmart. If you had purchased a single share of Walmart in 1990, your price would have been around $6 when adjusting for subsequent stock splits. Today, each share of Walmart is worth over $140. $1,000 invested at that time would have turned into over $23,000 at today’s prices.
In the case of Amazon, buying one share could be a good way to begin a position in a wide-moat, proven company. It may also be a good way to take advantage of a rare dip in Amazon’s share prices. Amazon is currently trading more than $70 below the top of its 52-week range. As such, investors who buy the stock at the current price may see outsized returns during a future recovery.
What Will Amazon Stock Be Worth in One Year?
While it’s never possible to predict exactly what a stock will be worth in the future, there’s a good chance that Amazon will go up over the coming years.
On average, analysts have placed fair value for Amazon at $134.50. This is 37 percent above the current price. The range of price targets for Amazon, however, is quite wide. The lowest target is $90, while the highest is $160.
Over the next 12 months, Amazon’s earnings per share are expected to rise from $1.33 to $2.12. If this large earnings jump occurs, it will very likely result in higher share prices.
If Amazon maintained its current price-to-earnings ratio of roughly 74, for example, the forward earnings projection would imply a price of roughly $157.
In reality, the price will likely be a good bit lower, as investors cannot reasonably expect sustained earnings growth at such a high rate. As such, a price of $130-135 as suggested by analysts is likely a reasonable estimate.
How Many Shares Would $1,000 Buy of Amazon Stock?
At the time of research, Amazon shares can be bought for $98.14. This means that it would be possible to buy 10 full shares of Amazon for $1,000.
If your brokerage allows you to purchase fractional shares, you can buy 10.19 shares for $1,000.
Please note that these numbers don’t take into account brokerage fees or other frictional costs that you may incur when buying stocks.
What Will Amazon Stock Be Worth in 10 Years?
Over the next 10 years, it is highly likely that Amazon will continue to increase its earnings and generate strong returns for shareholders. After facing some difficulties during the past year, Amazon appears to be primed for growth again and may outperform the market in the short term.
During the next 5 years, analysts expect Amazon’s earnings to grow at a compounded annual rate of nearly 33 percent. After that, it’s wise to assume that earnings growth will drop off to a more moderate level. Even if growth persists at a lower level, however, there could still be plenty of room for Amazon to generate steady returns for investors for many years to come.
Projecting stock prices out 10 years into the future is virtually impossible to do with any degree of certainty. However, it seems quite reasonable to suppose that Amazon could trade at 3-5 times its current price by that time. This assumes that the company is able to rapidly claw back the ground it lost in 2022 and then resume growth at a fairly high rate for at least a few more years before leveling off.
On the 10-year horizon, it’s also important to consider how some of Amazon’s current technology investments could play out. Amazon Web Services (AWS) is already the world’s leading cloud computing solution with 32 percent market share.
The company is also investing heavily in artificial intelligence to increase efficiency and bring new services to market for customers. Over many years, these investments could help Amazon to cut costs, raise revenues and grow beyond the natural limits of its core eCommerce business.
Does Amazon Stock Pay Monthly?
At this time, Amazon doesn’t offer a dividend payout. This is fairly normal for companies that are still growing rapidly, as they can often generate higher returns for investors by putting cash back into their businesses than by distributing it as dividends.
Amazon, however, generates large amounts of cash and could one day be a strong dividend performer. Although there’s no absolute guarantee that Amazon will become a dividend stock, it appears that the company is in a good position to distribute cash if and when it can no longer reinvest it effectively.
Why Are Amazon Shares So Cheap?
As noted earlier, Amazon has fallen considerably off of its previous highs. This is mostly due to a sharp decrease in earnings associated with higher operating costs.
In Q4, for instance, Amazon’s earnings per share dropped to just $0.03 per share from $1.39 in the previous year. Operating income likewise fell from $3.5 billion in Q4 2021 to $2.7 billion in Q4 2022. For the full year in 2022, Amazon posted a net loss of $2.7 billion.
Amazon’s move into losing territory drove the stock price down significantly. At the same time, investors were also generally becoming more bearish as interest rates rose and inflation continued to affect corporate profits. For reference, the S&P 500 index lost nearly 20 percent of its value in 2022 for many of the same reasons.
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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
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