Running head: DB FORUM 1
DB Forum 1
BUSI530 - Managerial Finance
March 18, 2015
Dr. Charles Smith
Liberty University Online
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Amazon.com
Internet retail brings access to a large variety of goods right to the consumers fingertips.
Consumers can shop using a laptop computer from the comfort of their couch, or using their
phones while on the go. No one does it better than Amazon. "Amazon is the leading e-retailer in
the United States with more than 74.45 billion U.S. dollars in 2013 net sales" ("Statistics and
facts," 2014). It currently operates 10 websites in 4 different continents ("Amazon international
around," ). Amazon helps connect the customer to a wide range of goods quickly.
Financial Position
As the leading e-retailer, Amazon is in a great position. Amazon's market value, at
$173B, is more than double its closest competitor, Vipshop Holdings (Standard and Poor's,
2015). Its book value per share has nearly double in the previous five years, climbing from 7.35
to 14.32 (Standard and Poor's, 2015). Regardless of one choosing to use the market or book
value, Amazon is a strong company. Amazon is positioned to remain the leader in internet retail.
Economic Outlook
With falling gas prices and virtually unlimited online shelf space, the economic outlook
for Amazon is promising. The price of crude oil has fallen by more than half in the past six
months (Plumer, 2015). Cheaper gas prices will translate in cheaper shipping costs for Amazon.
Unlimited online shelf space allows Amazon to offer more products with increased information.
As gas prices decline, consumers are likely to increase spending and Amazon is a expected to see
its share.
Investor Opportunity
Amazon is a solid investment for investors. According to Brealey, Meyers, and Marcus
(2012), "the natural financial objective of the corporation is to maximize market value" (p. 13).
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As the market value rose over the past five years, so too did the price per share. The price per
share grew from a high of 154.91 five years ago to a high of 408.06 last year with continued
growth each year (Standard and Poor's, 2015). Investors should consider purchasing Amazon
shares.
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References
Amazon international around the world. (n.d.). Retrieved from
http://www.amazon.com/gp/feature.html?docId=487250
Brealey, R., Myers, S., & Marcus, A. (2012). Fundamentals of corporate finance (7th ed.). New
York: McGraw-Hill/Irwin.
Standard and Poor's. (2015, March 18). Amazon.com. Standard & Poor's Stock Reports.
Retrieved from http://www.netadvantage.standardandpoors.com/
Statistics and facts about amazon. (2014, August 26). Retrieved from
http://www.statista.com/topics/846/amazon/
Plumer, B. (2015, January 23). Why oil prices keep falling — and throwing the world into
turmoil. Retrieved from http://www.vox.com/2014/12/16/7401705/oil-prices-falling
