Dividends and Amazon’s annual Prime Day arrives amid slow online sales

Most of us know Amazon and if you are interested in owning the stock, think AWS or cloud storage. In an interview with Jim Cramer the President of AWS says only 10% of the data is on the cloud, AWS has 30% market share and within 5 years it could easily be the most profitable division of Amazon. The division already worth $74 billion.

Most people know Amazon for its delivery service, it works. If you are a regular user, paying for Prime which includes free shipping is worth it. Prime is a cash cow for Amazon and over the years the service has risen from $99 to 119 and now is $139.

In an article by Haleluya Hadero of the Associated Press, research firm suggests sakes on Prime Day could be worth $7.76 billion. This would be 16.8% higher than last year because the day is mid July rather than mid June. The possibility of more back to school shopping is captured.

During the pandemic, Amazon was one of the fastest growing companies as it dominated warehouse expansion and increased its workforce to 1.6 million people with over $10 billion in costs. For the money, Amazon had leased or owned 387.1 million sq ft for its warehouses and data centers. This number is double from 2019.

Amazon has a problem, the consumer is spending less on line which means Amazon has too much space and too many people. According to Brian Olsavsky, the company’s chief financial officer, Amazon is in the consolidation phase rather than growth. Amazon has space which means it is changing rules for merchants which include giving them the same benefits of Prime subscription.

Linking to dividend paying stocks, all these companies has assets that can be used more efficiently, most of the time they do not have to. When changes come in the marketplace they can adapt and have the resources to adapt, which is why you want to own them.

There are more questions than answers, till the next time – to raising questions.


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