Amazon is one of the world's largest companies. Currently, the company has a market capitalization of $245.08 billion according to Yahoo! Finance; and the company is slated to drive around $100 billion in revenue in the year 2015 alone. There's only one problem… there seems to be no profit to be made. As a matter of fact, due to the lack of profit from Amazon, the company's current price to earnings ratio is a whopping 380.91; which is far above average. As a matter of fact, it's one of the highest PE ratios I've ever seen! However, the fact that the company isn't driving profits seems to be a big plan for the future; and that plan seems to be working. Today, we'll talk about what Amazon's plans are, how well they're doing at accomplishing their goals, what we can expect to see in the future, and of course, how binary options traders can profit from the trends. So, let's get right to it…
What Is Amazon's Plan In The First Place?
Amazon is making a major push to get consumers to cut the cords. Ultimately, they envision a world where there's no need for cable television, or desk top computers. Instead, they want to see consumers using tablets like the Kindle Fire and streaming TV services like Amazon Fire TV. So, the company is offering services like Amazon Prime, from which it derives absolutely no profit and in many cases, takes a loss on subscriptions. Ultimately, they want to become as ingrained in the day to day lives of consumers as Facebook is. When they grow to that point, then they can start worrying about profits; as consumers who use its services are unlikely to shy away from using them in the future.
How Well Is Amazon Doing At Making The Above A Reality?
In my personal opinion, I think they're doing great. After all, it can't be too hard to create such a large following when you're giving away the house for nearly nothing. Right now, Amazon has more than 1 million cloud customers; and that's nothing when you compare the cloud service to Amazon Prime. As a matter of fact, estimates from Geek Wire suggest that by September of 2014, Amazon Prime had between 30 and 40 million customers in the United States alone and around 10 million customers abroad. If you ask me, those numbers are absolutely incredible. Even more shocking, that number is likely growing rapidly and just went through a growth spurt on Prime Day.
What We Can Expect To See Moving Forward
First and foremost, I think it's important to mention that investors seem to love Amazon's plan. After all, even with little to no profits, investors keep pouring money into the stock; ultimately leading to the shockingly high PE ratio we're currently seeing. So, as a result, the stock continues to climb. As a matter of fact, over the past month, Amazon's stock price has climbed from $455.57 to $524 per share. While there isn't much to be had by way of profit at the moment, there are plenty of reasons to be excited about the stock; so, it's likely to continue climbing higher.
How Binary Options Traders Can Profit From The Trends
We're expecting to see gains from Amazon overall throughout at least the next several months. With that said, binary options will likely realize profits from call options. Therefore, when trading Amazon, it's going to be best to look for declines that drive the stock price down to support. When support is reached, there's only one way it can go from there…UP! So, when the price reaches support, purchase call options to take advantage of the resulting upward trends.
What Do You Think?
Where do you think Amazon is headed and why? Let us know in the comments below!