There are several companies that are literally changing the world, and Amazon.com Inc. (NASDAQ: AMZN) must be counted in this elite group. Amazon is almost single-handedly disrupting many different businesses - the most obvious one is the brick-and-mortar retail sector.
Amazon is spearheading the complete shift in how American consumers purchase products. That continues to bode well for Amazon stock...
And when it was rumored on July 10 that it was going after the "Geek Squad," electronics retailer Best Buy Co.'s (NYSE: BBY) in-home electronics repair service and its most unique offering, Best Buy stock immediately dropped more than 6%. Talk about eating a rival's lunch.
But that was not even the biggest news this week, as July 10 also saw the kickoff of the 2017 installment of Amazon's "Prime Day," a 30-hour sell-a-thon where the company offers huge bargains for Prime customers.
It's so big that media from print, to television, to cyber had it high on their reporting lists...
Move over Black Friday. Amazon Prime Day is a sales event that some might compare to the Home Shopping Network (Nasdaq: HSNI) on steroids - but without the human hucksters.
The company offers hundreds of deals, especially in electronics and its own branded products, that are designed to maximize shopper counts and drive sales. New deals are offered every five minutes during the 30-hour event.
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The only catch is that these deals are only for Prime members, who pay about $100 per year for free two-day shipping, streaming media, photo storage, and more. A Consumer Intelligence Research Partners (CIRP) report estimated that Amazon now has between 80 million and 85 million Prime members in the United States.
Even better, CIRP estimates that the average annual spending per Prime member is $1,300, compared to only $700 for non-Prime customers. Prime members also seem to make quick decisions without much comparison shopping - something any retailer would love to experience. Prime members get a lot for their membership, but they give the company so much more in return.
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In other words, Prime Day is going to be a revenue bonanza for Amazon. But with shares of Amazon stock trading near $1,000 each, is it still wise to buy AMZN?
Here's your full answer...
While the goal is to give revenue a boost, discounted prices will naturally cut into profitability. However, that has never been a problem for the company, as its strategy has been to grow market share and plow any profits back into the business. For that, Amazon has earned an unusually high stock valuation as measured by its price/earnings ratio. Apparently, the market is willing to pay more for a share of Amazon stock now for the promise of much higher earnings later.
As we've reported here on Money Morning before, what you may not know is that Amazon is much more than a retailer.
You see, not only does it sell merchandise, but it leads in streaming services, e-reader downloads with its Kindle product, entertainment production, and cloud infrastructure services. Its plan for product delivery by drone is also prominent in the news.
Investors are quite excited about Amazon as a retailer and as a technology company. Indeed, Money Morning Capital Wave Strategist Shah Gilani named it as one of the "Fab Five" technology stocks leading the pack by innovation.
Gilani said just yesterday that Amazon stock should shrug off its recent pullback and get back to an all-time high. Indeed, that level - $1,017.00 per share - was a mere fraction of a percent away as Prime Day 2017 neared its end.
"The numbers that come out of Prime Day may be the impetus to move the stock higher," he added. "I don't know if that alone will take it up to $1,000, but it's certainly heading back up there and above. The 'Amazonation' of America has occurred, and there's no slowing down on that."
For long-term investors, Amazon remains a tech stock to buy.
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