Where Will AMZN Be in 2025 After Bezos Leaves?

Since its start in 1994, Amazon (AMZN) has steamrolled its way to the top of the e-commerce space. The stock has delivered handsome returns since its IPO and is now entering a new era, with Jeff Bezos hanging up its boots as the company’s CEO later this year. What’s the forecast for Amazon stock in 2025? Will it continue to be a good investment?

Amazon stock hit a 52-week high of $3,554 in Apr. 2020 and has since fallen more than 10 percent. However, the company’s first-quarter 2021 earnings were way ahead of estimates, and it provided a rosy forecast for the second quarter. The stock looks like a long-term growth story.

Amazon is an ecosystem of various growth engines. While consumers mostly think of Amazon as an e-commerce or a streaming company, it's also a cloud play. The company’s AWS (Amazon Web Services) business is its most profitable vertical, and contributes most of its earnings. Furthermore, Amazon's marketplace offers almost everything under the sun, and its Prime streaming service keeps customers glued to the platform. This diversity is a key factor in its competitiveness.

The forecast up until 2025 looks promising for Amazon. Digitization has been picking up and boosting e-commerce companies across the board, and the COVID-19 pandemic accelerated that. Whereas it may not be able to sustain its 2020 growth, Amazon is set to stay on an upward path.

As we look forward to 2025, two major boosts to AMZN’s growth in e-commerce will include organic growth by people who already use its services, as well as expansion in international markets. Its global share of total e-commerce retail sales is bound to continue growing.

Loup Ventures managing partner Gene Munster also has a positive forecast for AMZN stock. He expects up to 20 percent of Amazon’s growth between 2020 and 2025 to come from India, a major market for the e-commerce giant. Furthermore, the company’s international e-commerce operating income was positive in the first quarter of 2021, and that should continue to expand as COVID-19 costs fade. 

Valuing a growth stock like AMZN isn't easy, as near-term earnings might not give the correct picture. However, the stock looks undervalued now after having traded in a narrow range for the last nine months.

AMZN stock's next-12 month price-to-earnings multiple is 57.7x, a low that it's touched only twice in the last 10 years. The first time was when U.S. tech stocks slumped in Q4 2018, and the second during the COVID-19 stock market crash of Q1 2020. On both occasions, AMZN stock rebounded quickly. I wouldn't be surprised it breaks out and touches a new high soon. 

After founding and leading the company for over 25 years, Bezos will pass on the role of CEO in the second half of 2021 to Andy Jassy. Bezos will become executive chairman.

Although there's no denying has Bezos’ leadership has been one of the factors behind Amazon’s success, the company will likely remain a good investment after he leaves. A lot of founder-led companies have transitioned nicely under new leadership, and we have no reason to believe it will be different for AMZN.