Samantha Fischler is a Financial Analyst at I Know First.

Amazon Stock Prediction

Summary

Each of Amazon’s first three quarters brought in revenue growth of up to 31% YOY

Amazon Go is working to create a “Just Walk Out” shopping experience

Amazon Now to take foothold in India to deliver groceries and household items to doorsteps within 2 hours

PrimeAir made its first successful package delivery by drone

I Know First maintains a bullish stance on AMZN for 2017

Amazon has seen a thus far successful 2016, even hitting its all time high stock price back in October. Amazon’s stock is up by approximately 13% year-to-date for the first 3 quarters. Despite a significant rise in the price for Prime membership earlier this year, subscriptions to Prime have only been increasing. Amazon Web Services has seen the introduction of many new functions. Now that 2016 has established itself as a power year for Amazon, what can investors expect in Q4 2016 and for the rapidly approaching 2017?

2016 Thus Far

As the homepage of the Amazon Investor Relation’s website highlights, Amazon has had a very successful 2016 to date. In Q3 specifically, Amazon reported net income of $252 million or $0.52 per share. While this was lower than the $0.78 per share expected by analysts and AMZN fell 5% after the earnings report, Amazon’s stock has since rallied. Amazon did however surpass expectations regarding revenues for Q3 which came out to $32.7 billion, beating the anticipated $32.69. Additionally, below is an image from the investor relations site that boasts Amazon’s remarkable year-over-year quarterly revenues for the first three quarters of 2016.

Image Source: Amazon Investor Relations

In terms of Q4, Amazon expects net sales to be in the range of $42.0 billion to $45.5 billion, thus showing a year-over-year growth rate of between 17-27%. Operating income is projected to be between $0 and $1.25 billion, as opposed to the $1.1 billion in Q4 2015.

Over 30% of purchases between Black Friday and Cyber Monday took place on Amazon’s website. Given this number, Q4’s earnings will likely depict high revenues, a large percentage of which coming from end of the year holiday shopping.

Amazon Go

Amazon’s latest endeavor is to create a new way to buy your groceries with “Amazon Go.” The concept behind Amazon Go is to create a “Just Walk Out” shopping experience. The products sold at Amazon Go use technologies such as computer vision, sensor fusion, and deep learning to detect when products are taken off of the shelves. The trackers take note of what’s in your cart and when you’re done shopping, you simply walk out of the store and your Amazon account gets charged. Amazon has already interacted with the grocery industry through its grocery delivery service, Amazon Fresh. Amazon Go is currently in its beta phase, with its sole location in Seattle, WA that is currently only available to Amazon employees to fulfill their grocery needs. Amazon is set to bring in a lot of revenue when they open more locations that will be available to the public in early 2017.

Image Source: Amazon

Amazon Now

On December 19, Amazon also announced the “Amazon Now” service taking hold in parts of India. Through the service, consumers will be able to purchase groceries and household goods online from local stores and have them be delivered to their doorsteps within 2-hours. Alternatively, deliveries can be scheduled for a later point in time. There is also an app available for Androids to make shopping through Amazon Now easy and accessible on the go and apps will be available on other platforms such as Apple’s App Store in the future. 2017 will bring Amazon Prime’s online video streaming service to India as well. This move will bring in new subscribers to Prime for use of the streaming service. In turn, many of these users may purchase more products from Amazon to benefit from the 2-day free shipping component that comes as part of an Amazon Prime subscription.

Better Shipping—You Just Can’t Drone this Out

Amazon is officially among the frontrunners in the drone industry with its experiments using drones for delivery. Amazon announced just last week that it successfully tested a drone in England. The first “PrimeAir” delivery took 13-minutes from the time that the customer confirmed the order until the package was delivered. Once Amazon secures the necessary permits and finishes testing the drones, PrimeAir will be poised to bring in strong revenues for the company, which will dominate the delivery by drone market for the foreseeable future because of its early start in a not-yet-existent market. Google is a competitor in this market. Earlier this year, it programed a drone to deliver burritos to Virginia Tech’s Campus.

Amazon is creating a new app to create a more efficient way for the packages it ships out to travel. The goal of the app is to pair up its own trucks with deliveries to different amazon warehouses and parcel delivery services. This app will even further secure Amazon’s position as a company with smooth-running and extremely efficient logistics, lowering costs going forward for the company.

Conclusion

AMZN closed at $766.00 on December 19, up $102.51 from a year ago. I Know First continues to maintain a bullish stance on AMZN going forward into 2017 due to the companies host of new apps, services, and prospects for the Q4 2016 earnings report.

For an example of I Know First’s prior bullish predictions on Amazon, refer to the forecast dated January 9, 2015 below. The I Know First algorithm gave a bullish signal of 105.74 for AMZN with a predictability indicator of -0.06 in this year-long forecast. On January 9, 2016, Amazon displayed growth of 102.04% exemplifying the accuracy I Know First’s algorithm.

I Know First’s algorithm forecasts how stocks are going to perform for 3 days, 7 days, 14 days, 1 month, 3 months, and a year. In the case of Amazon (AMZN), the middle row represents the signal strength and the bottom number represents the predictability indicator, the historical correlation which is heavily weighted on the algorithm’s recent predictions. To learn more about how I Know First’s algorithm operates, click here.