amazon stock fundamental analyses: will the company keep growing ?

one might ask, why is amazon one of the biggest companies in the world in terms of company value ? why is the value of the company and the stock price keeps going up constantly for 20 years already ? why did amazon succeed and not other companies like EBAY for example ?

well, to answer these question we need to understand what is the core business of this company, and we need to understand the market of consumer products. The market for products is divided into two main parts, the first part being consumer goods, which are consumed and used rapidly by the costumer, such as food products, hygiene products and cleaning products, but mainly food products. And the second part of this market is products that are not rapidly consumable, such as toys, kitchen utensils, and home appliances, this type of product stays with the consumer for a long time.

In essence, Amazon is a company that sells products that don’t consume quickly, such as toys and home appliances, that’s the bulk of its business. This is because the other types of products, which are mainly food products, are still traditionally bought by the costumer at the local supermarket, because it is difficult to sell such products online, they should be kept refrigerated, and they should be provided immediately to the customer. And so Amazon has no choice but to rely on the sale of non-food products.

The problem with selling non-fast consumable products is that the inventory turnover of such products is slow, consumers buy them once, and they stay with them for a long time, unlike food products. And this is basically Amazon’s main weakness as a company. No wonder that in recent years Amazon has been trying to buy other food-selling companies like “whole-foods”.

The conclusion of all this is that Amazon’s growth over the past twenty years was not based on improving Amazon’s performance, and not because Amazon has succeeded in surpassing local supermarkets such as Walmart, but only because over the last twenty years there has been a steady increase in Internet shopping, and that people are buying through Internet, what they were not used to before. However, this situation is now balancing a bit, and we have reached a point of balance where most of the population already buys on the Internet, and trusting the platform. And that actually implies on the future of the company of Amazon and it’s stock price, it probably won’t grow at the same rate as it has grown to this day, but rather it will remain at the same price level.