For a long time, Amazon Stock (NASDAQ: AMZN) seemed to have a winning streak. In the decade leading up to November 2021, the company experienced a significant increase in revenue, resulting in a growth of over 1,500% in its stock price. However, the company faced challenges including tough comparisons, a slowdown in online retail growth, and a bear market. As a result, the stock price has decreased by half in the past 52 weeks, falling 54% from its peak in late 2021.
Despite the challenges faced by the company, there may be potential for growth in the future. Here are three predictions for what to expect from Amazon in 2023.
1. Amazon’s e-commerce growth recovers:
Similar to other digital retail companies, Amazon experienced slower growth in 2022 due to the lingering effects of the pandemic. During the early stages of COVID-19, there was a significant increase in e-commerce shopping as people were on lockdowns. However, this surge in business eventually slowed down and had a negative impact on growth in the following year.
According to Wells Fargo analyst Brian Fitzgerald, the trend is starting to shift back in favor of e-commerce. Fitzgerald believes that the growth rates of brick-and-mortar and e-commerce are starting to stabilize and return to pre-COVID levels. This suggests that the sales rates of both e-commerce and physical stores are returning to their usual levels.
There may have been early signs of growth during the Black Friday weekend. Amazon reported that it had its biggest holiday shopping weekend ever during the five days between Thanksgiving and Cyber Monday, also known as the “Turkey 5.” Although no specific numbers were provided, Amazon stated in a press release that it was a record-breaking shopping weekend for the company.
2. Amazon expands its presence in the healthcare industry
In the coming years, we can expect Amazon to continue its expansion into the healthcare industry. The company has been increasingly entering this field in recent years.
In 2018, Amazon’s acquisition of PillPack, an online pharmacy and delivery service, for around $1 billion garnered attention. PillPack not only dispenses prescriptions, but also organizes them into packets labeled with the dosage, date, and time for convenience. The company was eventually rebranded as Amazon Pharmacy, marking Amazon’s entry into the medical field.
In the previous year, Amazon made headlines with its plans to acquire One Medical, a primary care start-up serving nearly 800,000 people in 16 markets, for $3.9 billion. One Medical offers a combination of digital and in-office care, allowing patients to message providers, book appointments, refill prescriptions, or video chat with a doctor through the app.
However, not all of Amazon’s ventures in the healthcare industry have been successful. For example, Haven, a joint venture with Berkshire Hathaway and JPMorgan Chase, has been dissolved. Amazon also recently closed Amazon Care, its primary care experiment which provided telehealth and in-office services.
It is clear that Amazon has interests in the healthcare industry, and based on its recent actions, it is likely that the company will continue to expand its presence in this field in 2023. While the specifics of its plans are not yet known, we can expect to see more movement from Amazon in the healthcare sector.
3. Amazon continues to dominate in the cloud computing industry
Amazon Web Services (AWS), the company’s cloud computing division, was a pioneer in the industry and remains the dominant leader in the market today. According to Canalys, AWS holds approximately 32% of the market share in cloud infrastructure services, followed by Microsoft Azure and Google Cloud with 22% and 9% respectively.
In addition, the adoption of digital transformation by businesses has led to an increase in the migration of data, systems, and applications to the cloud. The infrastructure-as-a-service (IaaS) market has experienced significant growth, reaching $66 billion in 2021 and is expected to increase to over $279 billion by 2027. These trends will likely contribute to the continued growth of Amazon’s cloud services and help the company maintain its leading position in the industry in 2023.
Possible Recovery for Amazon Stock from Previous Low Points
Amazon’s stock has experienced a decline of about 54% from its peak in late 2021. Despite this, the company has continued to expand, although at a slower rate. Additionally, Amazon’s current valuation is relatively low compared to its past. The company’s price-to-sales ratio, which is currently around 1.5, has not been this low in approximately eight years.
It is likely that Amazon’s stock price will recover in 2023 due to the company’s low valuation and dominant positions in cloud computing and e-commerce.
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