Amazon (AMZN) Stock: Should Declines Be Concerning?

0, Inc. (NASDAQ: AMZN)

After reaching an all-time high recently, Amazon is having a rough day in the market today. This leads many investors to ask if they should be concerned about the declines. In my opinion, the answer is no! In fact, Amazon is one of the strongest stocks on the market today and is likely headed further upward. Today, we’ll talk about why the stock is headed downward today, why you shouldn’t be concerned, and what we can expect to see from AMZN moving forward.

Why Amazon Is Falling Today

As mentioned above Amazon isn’t having the best of days in the market today. Currently (10:06), the stock is trading at $689.63 per share after a loss of 0.63% or $4.34 per share. After researching the news to see what is going on, I haven’t found any negative information with regard to the company. In fact, everything I could find was overwhelmingly positive. When these types of things happen, it’s important to remember that price movement in the market tends to happen through a series of overreactions. We see upward movement followed by downward movement, creating trend lines known as support and resistance. In this particular case, Amazon recently reached an all-time record high. It’s not uncommon to see investors get cold feet when a stock is trading on a record high. That’s exactly what’s going on today.

Why Investors Shouldn’t Be Concerned About The Declines

While I understand that declines can be concerning, in this particular case, investors have nothing to worry about. The reality is that what we’re seeing in the market today is nothing more than normal market movement. As a result, we can expect to see a rebound relatively soon.

Why AMZN Is One Of The Best Picks You Can Make

If I were asked what I thought about Amazon a year ago, my opinion would have been very different. However today, my opinion on AMZN is incredibly bullish. The reality is that throughout 2015, we’ve seen several positive movements from the company. First, AMZN started early in the year by announcing how Amazon Web Services was doing. At the first update, we learned that the company had already grown to be worth $5 billion. Also, one of the big concerns last year was the fact that Amazon couldn’t seem to produce gains on an earnings report. After all, investors don’t want to invest in losing businesses. However, that’s changed this year as well.

Another big factor leading to my bullish opinion on Amazon is their Prime service. While it seems like a money loser in the beginning, when you dig into the details, it’s clear that Prime is profitable. Earlier in the year, we found out that a large percentage of Prime members spend at least $800 per year on products purchased from the online retailer. Considering the fact that Amazon has millions of Prime members, this works out to be quite a bit of money on an annual basis.

Finally, Amazon seems to be holding its position as king of online retail, and that’s likely to continue for quite some time. My opinion on their leadership revolves around the company’s infrastructure. Last year, Amazon spent millions of dollars on building fulfillment centers all throughout the United States and around the world. Considering the fact that when consumers order products online, they want them quickly, this was a great move for AMZN. Because of their strategically placed fulfillment centers, Amazon is able to blow away the competition’s shipping time, which will likely keep them ahead of the game. All in all, things are looking up for AMZN and today’s declines only represent a strong opportunity to buy at a discount.

What Do You Think?

Where do you think AMZN is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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