Amazon stock up 24% in January 2018
US-based (SPY) Internet giant Amazon (AMZN) rose 24% in January 2018 to close at $1450.89. Amazon stock has risen 76% in the last 12 months and generated returns of 56% in 2017. Amazon stock is now trading 81% above its 52-week low of $803 and 1.5% below its 52-week high of $1,472.58. Peers Apple (AAPL) and Google (GOOG) (GOOGL) generated returns of -1% and 12% last month, respectively.
According to D.A. Davidson analyst Tim Forte, Amazon stock is expected to rise to $1,800.00 in the next 12 to 18 months, up from the earlier price target of $1,500.00. The analyst also expects Amazon’s price to reach $2,450.00 within the next five years.
Why are analysts optimistic about Amazon?
Amazon’s revenue is expected to rise 36.8% YoY (year-over-year) to $59.8 billion in 4Q17, which will be the firm’s highest ever quarterly revenue. Amazon’s revenue is also expected to rise over 30% in fiscal 2017 to $1,77.26 billion, 36% in 1Q18 to $48.73 billion, and 29.1% YoY to $228.92 billion in fiscal 2018.
Amazon Prime was launched worldwide in late 2016 and is now available in over 190 countries. Analysts have estimated Amazon’s video streaming revenue to surpass $4.5 billion in 2017. Amazon is looking to spend a substantial amount on creating original content for viewers. In this series, we have already discussed that Netflix (NFLX) will be spending approximately $7.5 billion to $8 billion in 2018 on creating original content.
Investment research firm BMO Capital is optimistic about Amazon’s advertising potential and believes the company has an opportunity to increase advertising revenues to $18.0 billion annually in the medium term.