Amazon is one of the world’s most valuable companies. It is a tech-focused organization involved in artificial intelligence research, e-commerce, cloud computing, and streaming. The definition of a blue-chip stock, Amazon stock is a safe and attractive option for investors with an affinity for tech companies.
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Amazon (AMZN) went public in 1997. An Amazon share cost $18 then. Now, Amazon shares trade north of $3,000.
If you are interested in buying Amazon shares, here’s what you have to know.
Amazon’s Stock Splits
Amazon has had a few stock splits. In the wake of these splits, the stock price rallied significantly. There is such a stock split in the works now(June 2022).
Amazon investors who have one share will get 20 shares in its stead, the total value of which will remain the same as that of one share now.
Why do companies split their stocks?
Stock splits allow investors to buy shares for less, opening the way for smaller investors to pour their money into the company. That also explains why stocks tend to rally after stocks-splits. A new category of retail investors gains access to them.
What Should You Consider Before Buying AMZN Stock?
Before committing money to a venture, you need to know how profitable it is likely to be, how long it may take to appreciate, whether it is likely to appreciate soon, etc.
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AMZN’s Investment Potential
Amazon may be a trillion-dollar company, but it may not yield profits as quickly as you would like, or its stock price may hit a rough spot soon. You need to know what to expect in this respect. Do not decide based on what you know about the company as a customer.
Knowing the company as an investor means digging up information about its management, revenues, earnings, and competition, among other variables.
Don’t let the past performance of any stock mislead you into investing. Past performance is never indicative of future performance.
Does it Fit Your Portfolio?
If you have a tech-heavy portfolio already, AMZN may not be a good fit. Putting all your investable money into a single stock is never a good idea. You can diversify by gaining exposure to a variety of companies through a mutual fund or index fund.
What about your future stock investment plans? Ideally, you should invest as much of your disposable income as possible all the time. Diversification over the long run can be a headache if you do it manually.
How Much Money Should You Invest into AMZN?
Don’t put all the money you have saved for investments into Amazon shares. That would hurt your portfolio. Your time preference should not be higher than five years. Consider invested money locked up for at least five years. It doesn’t make sense to change your mind and jump from one investment to another frequently.