Amazon, Inc., known as Amazon, is a major American tech company that focuses on online shopping, cloud computing, advertising, streaming, and AI.
Founded in 1994 by Jeff Bezos, it started as an online bookstore and expanded into various product categories, earning the nickname “The Everything Store”. Amazon owns subsidiaries like Amazon Web Services, Zoox, Kuiper Systems, and others, including acquisitions like Whole Foods. It’s known for disrupting industries and reinvesting profits.
By 2023, it’s the largest online retailer, smart speaker provider, and cloud service. Amazon Prime, with nearly 200 million subscribers, drove its growth, surpassing Walmart in 2021.
If you’re considering investing in Amazon, this guide provides insights into buying, selling, and other investment options, including its stock split history.
Table of Contents
How to Buy Amazon Stock
Step 1: Open a Brokerage Account
To invest in Amazon stock, you need to open a brokerage account. If you don’t already have one, you can check out our curated list of the best online brokers to help you kickstart your search.
Many brokers now offer fee-free stock trading. But before you start, check if there are any hidden fees or if you need to have a minimum amount in your account. To determine the type of account you need, consider your own investment goals.
- For long-term retirement savings, consider a Roth for tax advantages. If you’ve held your Roth IRA for at least five years, you can withdraw money without paying taxes or penalties. Unlike a Traditional IRA, a Roth IRA doesn’t have mandatory minimum withdrawals.
- If you’re saving for general goals like building wealth or a home down payment, a taxable investment account might be a more viable option. Unlike an IRA or a 401(k), you can withdraw your money at any time, for any reason, with no tax or penalty from a brokerage account.
Step 2: Research Amazon’s Fundamentals
Before investing in any company, including Amazon, it’s important to do thorough research. Here’s what you should do:
Access Amazon’s financial reports, like the annual 10-K and quarterly 10-Q filings. You can find these on Amazon’s investor relations page or the U.S. Securities and Exchange Commission (SEC) website.
Check out expert analyses from trusted sources such as Fidelity, Morningstar, or Forbes. This will give you insights into Amazon’s financial health, growth prospects, and potential risks.
Step 3: Decide How Much to Invest
Before you start investing in Amazon stock, set your investment budget. Consider these factors:
- Budget: Make sure your investment doesn’t interfere with your monthly expenses, emergency funds, and retirement savings.
- Amazon’s Stock Price: Understand its valuation and decide on the investment amount. While some platforms allow fractional share purchases, others require buying whole shares.
- Risk Tolerance: Individual stocks carries inherent risks. Though Amazon is well-established, you still have to assess your comfort level with risk to determine whether you want to diversify your investments with index funds or ETFs.
- Investment Strategy: Decide between lump-sum purchase or regular investments using dollar-cost averaging which can reduce the impact of short-term market fluctuations.
Step 4: Place an Order
When you’re ready to invest in Amazon, just follow these steps:
- Log into your online brokerage account or trading app.
- Enter Amazon’s ticker symbol (AMZN).
- Specify the number of shares you want to buy or the amount of money you want to invest.
- Choose between two common order types: market orders (executed at the current market price) and limit orders (executed when the stock reaches a specific price you set).
Keep in mind that Amazon is listed on the Nasdaq exchange, which operates from 9:30 a.m. to 4:00 p.m. ET, Monday through Friday. Your brokerage might offer access to additional pre- and after-market trading hours.
Step 5: Monitor Your Investment
To effectively manage your investments, set up a routine to review your portfolio’s performance:
- Schedule regular check-ins, whether monthly, quarterly, or annually, to monitor your investments.
- Compare Amazon’s performance with benchmark indexes like the Nasdaq 100 or S&P 500.
- Watch Amazon’s financial data in its public filings to assess how the company handles its finances over time.
How to Sell Amazon Stock
At some point, you may decide to sell your Amazon shares. When that time comes, the process is relatively straightforward:
- Access your brokerage or investment app.
- Enter Amazon’s ticker symbol (AMZN).
- Specify the quantity of shares you want to sell.
- Confirm the sale.
If you’ve earned substantial profits, it’s advisable to consult a tax professional, such as a certified public accountant (CPA), to develop a tax-efficient strategy.
Other Investment Options
Although investing in individual stocks is attractive, it’s crucial to diversify your portfolio for effective risk management. Consider investing in index funds or exchange-traded funds (ETFs) that hold a variety of stocks, including Amazon. Amazon usually represents a substantial portion of these funds:
- Nasdaq 100 funds typically allocate around 7% of their holdings to Amazon.
- S&P 500 funds include Amazon, making up about 3.5% of the index.
Learn more: Best Investment Options
Amazon Stock Split History
Amazon has had several stock splits since its initial public offering (IPO) in 1997. Stock splits aim to lower share prices and boost liquidity:
- The latest split was on June 6, 2020, with a 20-for-one split, significantly lowering the share price.
- Prior splits included a two-for-one split on September 2, 1999, a three-for-one split on January 5, 1999, and a two-for-one split on June 2, 1998.
