The vast majority of major stocks experienced double-digit percentage losses during the COVID-19 lockdown, but Amazon wasn’t one of them. On the contrary, the online retailer continues its upward trajectory. If you do want to buy Amazon shares of your own, you will need to use a UK share dealing account that gives you access to the US-based NASDAQ stock exchange.
In this article, we explain how to buy Amazon shares online in the UK. This covers the steps required to buy Amazon shares in the fastest, cheapest, and safest way, as well as the best UK broker to do this with.
With Amazon now boasting one of the largest market capitalizations globally, it will come as no surprise to learn that lots of UK brokers now allow you to buy its shares. But, this isn’t to say that all brokers are worth considering.
On the contrary, you need to spend some time looking at the types of fees and commissions the platform charges, what UK payment methods are supported, and crucially – whether or not the broker is licensed by the FCA.
Taking all of this into account, below you will find some popular UK stockbrokers that allow you to buy Amazon shares online.
eToro is a market leading broker that providers access to more than 800 stock, including Amazon. This broker is very competitive when it comes to pricing, as you can buy shares without needing to pay any share dealing charges or annual fees.
One of the unique aspects of eToro is that it allows you to both buy shares in the traditional sense and trade share CFDs. By trading CFDs, you can speculate on the price going down and use eToro’s 1:5 leverage to make larger trades.
eToro is famous for being a social trading platform, meaning that you can engage with other members of the trading community. It also offers innovative copy trading tools, meaning you can copy the entire portfolios of top-performing investors!
Minimum deposits start at $50, which is around £36.26. With that said, eToro does not require you to purchase whole Amazon shares, which are now priced at well over $3,000 each. Instead eToro offers fractional share trading, allowing you to invest from just $50 (about £36.26), meaning you can buy a ‘fraction’ of Amazon shares.
When it comes to the safety of your funds, eToro is regulated by the FCA, as well as ASIC (Australia) and CySEC (Cyprus), so you’re funds are protected. Another benefit of eToro is that it offers a brilliant stock trading app that you can use to buy Amazon shares on your mobile.
67% of retail investor accounts lose money when trading CFDs with this provider.
Although you might not have heard of Fineco, the Italian-based financial institution has been active since 1999. On top of traditional personal and investment banking services, the provider also offers a fully-fledged online stock trading arena. Not only does this include thousands of CFD instruments, but also a comprehensive offering of traditional shares.
Fineco is one of the cheapest online stockbrokers to buy Amazon shares from, not least because you will pay just £2.95 per trade. As such, whether you decide to invest £100, £500, or £50,000, you will always pay just £2.95 when you buy, and then again when you sell. It is also notable that you can buy Amazon shares at Fineco without paying any spreads.
We should, however, note that you will need to pay a small annual platform fee at Fineco, which amounts to 0.25% on everything up to £250,000. Nevertheless, Fineco is also suitable if you want to diversify into shares, markets, or economies, as the broker gives you access to a significant number of ETFs and investment funds. Once again, fees are extremely competitive. In fact, you can buy and sell funds without paying any dealing fees at all.
You can get started at Fineco with a minimum deposit of just £100, and you will need to fund your account via a UK bank transfer. The broker is heavily regulated, which ensures that your funds are kept safe at all times. This includes that all-important FCA license.
Although Amazon has rewarded shareholders handsomely over the past decade or so, it is important that you conduct your own research nonetheless. In this part of our guide, we explore some of the most important factors that you need to consider prior to buying Amazon shares.
Launched in 1994 by Jeff Bezos, Amazon began life as an online bookstore. It then moved into other areas of online retail, such as DVDs, CDs, and consumer goods. Just three years after its foundation, Amazon made the decision to go public. Opting for tech-oriented NASDAQ, Amazon shares were initially priced at $18. This valued the company at just under $500 million.
It was a somewhat rocky ride for Amazon in the years to follow, as Amazon benefited greatly from the dot com boom. But, and much like the rest of its industry counterparts, Amazon suffered heavily in the fallout of the subsequent dot com crash. In fact, it took near-on 14 years for its shares to regain the heights it achieved before the crash.
Since then, it has been nothing but an upward trajectory for Amazon shareholders. In fact, at the time of writing in September 2021, Amazon shares are priced at $3,488.24. This translates into a stock price increase of 19279.1% from its initial IPO price of $18. However, you also need to factor in several stock splits along the way – meaning your return on investment would be even higher.
In simple terms, had you invested £1,000 in Amazon back in 1997, your investment would now be worth over $1.34 million. To put all of this into perspective, Amazon now has a market capitalization of $1.77 trillion. Not only this but according to Bloomberg founder and executive chairman, Jeff Bezos, is personally worth over $201 billion.
Amazon Dividend Information
Taking all of the above into account – that Amazon is now on the largest, most successful, and most profitable businesses in the world – you might be surprised to learn that the company is yet to pay a single cent in dividends. This is somewhat uncanny when you consider just how financially strong the firm is.
However, the company has reiterated that it plans to reinvest its dividends to keep the business growing. After all, the company has diversified into heaps of other, cutting-edge sectors that are cash-flow heavy. This includes artificial intelligence, cloud computing, and digital streaming.
Still not sure whether you should buy Amazon shares? Whenever you’re investing in a company, whether it be Amazon or the likes of Facebook or Netflix, it’s always important to do your research. Below we list some of the reasons why you might want to consider adding Amazon to your portfolio.
For investors who got in at the ground floor when Amazon shares were first listed on the NASDAQ exchange, this became one of the best long-term investments in history. Since its IPO in 1997, Amazon has grown to become one of the biggest publicly-traded stocks with a market cap of $1.77 trillion. Most market analysts hold the tech company’s diverse portfolio accountable for its continual success. Some experts even forecast Amazon’s market valuation reaching the $2 trillion mark within the next decade.
So it really was a case of the early bird catching the worm for Amazon shareholders in May 1997. To further this point, according to CNBC if you had invested $1,000 during the initial public offering, your investment would now be worth $1,362,000. But is it too late to make long-term gains from an investment in this growth stock? Read on to find out more.
All-Time High Territory Is Upon Us
Swing traders will be all over Amazon at the time of writing; not least because the trend continues to point northwards. More specifically, Amazon shares have been just below the all-time high closing price of $3,7331.41 experienced in July 2021.
This is particularly interesting when you consider the impact that the COVID-19 pandemic had on the wider stock markets – with some of the largest PLCs losing anywhere between 30-50% in value. Ultimately, there is no reason to believe that Amazon’s fortunes will end any time soon, so it will be interesting to see how high it can go in the coming 6-12 months.
Core Retail Business Continues to Thrive Year-on-Year
When we see the kind of stock market growth that Amazon has encountered in the past few years, you would normally attribute this to an up-and-coming firm like Tesla. However, it is important to remember that Amazon and its primary core business model – online retailing, have been around since 1994.
Adding in the factor of pent-up demand caused by the pandemic, and it looks like a great environment for Amazon to thrive. Q1 2021 results noted a 44% increase in revenue from the previous year, whilst net income rose to $8.1billion – more than triple the figures for Q1 2020.
Loyalty of the Amazon Brand is Key
Customer loyalty is absolutely key if Amazon intends to retain its position at the top of the online retailing space. This is especially the case when you look at the numbers associated with its Prime membership service. According to data from Digital Commerce 360, Amazon Prime customers based in the US show a 93% retention rate after the first year, with this rate rising to 98% in the second year. This showcases just how loyal Amazon’s customers are.
Also, a Bank of America study found that 67% of Prime members are either unlikely or very unlikely to cancel their plan. While 6% said they planned to cancel, this is actually 2% less than the same study that was carried out the year prior.
While online retail is booming for Amazon, let’s not forget about its other innovative projects. For example, the firm recently entered the online grocery space. In order to get a firm grip on this sector, as well as investing big in Deliveroo and landing a chunk of their shares. Amazon is expanding its super-fast 1/2 hour delivery times. Moreover, it has also scrapped its $15 monthly fee for the majority of its Prime members. In turn, this is expected to attract even more subscribers to its Prime service.
Then you have Amazon Web Services (AWS), which generated a remarkable $45.37 billion in revenue in 2021. This is more than both Google and Microsoft put together in terms of their respective cloud computing. Amazon is also increasing its exposure to artificial intelligence and drone deliveries, so this is yet another set of sectors to keep an eye on in the coming years.
Even with a market cap of $1.77 trillion, there may still be room for further growth. Currently priced at $3,475.79, the all-time high Amazon share closing price was $3,731.41 on July 8th, 2021. This means that Amazon shares are only trading -6.85% off their record high just two months ago. Investors who didn’t buy shares of Amazon when the market price fell below $2,900 earlier this year may have missed the boat.
But is it too late to get in on the action of this blue-chip growth stock?
Upon closer inspection, Amazon shares appear to be somewhat undervalued.
Of course, Amazon’s price-to-earnings ratio of 60.18 may appear to be on the high end of the spectrum at first glance. However, by taking a different perspective we can see just how quickly the tech and e-commerce giant’s business is expanding. Amazon’s unprecedented growth momentum more than justifies its premium market valuation.
Amazon’s quarterly revenue for Q2 2021 was $113.080 billion, representing a YTD increase of 27.18%. The company’s staggering growth doesn’t end there. When we cast our eyes to Amazon’s historical data we can see that it has continued to generate record annual revenues. For example:
- Annual revenue for 2018: $232.887B representing a YTD increase of 30.93%
- Annual revenue for 2019: $280.522B representing a YTD increase of 20.45%
- Annual revenue for 2020: $386.064B representing a YTD increase of 37.62%
- For the 12 months ending June 30, 2021 Amazon’s revenue was $443.298B which represents an increase of 37.76% year-over-year.
Crucially, its cloud computing and e-commerce businesses are accounting for most of the company’s exponential growth. Amazon’s consumer-targeted sales, which are mainly made up of its e-commerce ventures, rose by more than 50% worldwide. Additionally, Amazon Web Services (AWS) revenue grew by more than 30%.
What does Amazon CFO Brian Olsavsky have to say about the company’s relative growth slowdown from Q2 2020?
On a call to CNBC reporters Amazon’s CFO said: “Our customers are safe and healthy and ordering from us. And we know that there’ll be more vacations or be more mobility. There’ll be things that probably people shied away from last year and that’s all good. But it does tend to lead them to do other things besides shop. So we’re just adjusting our run rates in the, in the period that we see that happening.”
Amazon’s revenue increased by 27% year over year to $113.08B. While this is a significant slowdown from Q2 2020, when sales soared by 41%, Amazon CFO Brian Olsavsky blamed the slight growth slump on the pandemic lockdowns.
Amazon Stock Fundamentals
What is the P/E ratio?
The P/E ratio measures the interaction between a stock’s price and its earnings per publicly-issued share. To calculate the P/E ratio, you need to divide the current market price of a stock by its earnings per share.
Typically speaking, if you’re searching for a value stock you want to find a low P/E ratio, while the opposite is true for growth stocks. When companies have record earnings, it’s a good indicator that many investors are interested in investing.
At the time of writing, when you divide Amazon’s share price dividend by the per-share earnings over a one-year period you get a trailing price/earnings ratio of around 60.33. Simply put, Amazon shares trade at roughly 60.33x recent earnings.
Let’s compare Amazon’s P/E ratio with several other blue-chip stocks listed on the NASDAQ exchange:
|Company Stock||P/E Ratio|
|Amazon (NASDAQ: AMZN)||60.33|
|Apple (NASDAQ: AAPL)||28.90|
|Facebook (NASDAQ: FB)||27.52|
|Alphabet (NASDAQ: GOOGL)||28.62|
|Netflix Inc (NASDAQ: NFLX)||60.15|
|eBay Inc (NASDAQ: EBAY)||3.95|
|Paypal Holdings Inc (NASDAQ: PYPL)||69.21|
What is the PEG ratio?
The P/E to growth ratio, otherwise referred to as PEG, is measured by dividing a stock’s P/E ratio by its EPS growth rate. A PEG ratio under one indicates a company’s shares could be a good investment. The PEG ratio is typically believed to work with growth stocks. This means stocks that are generating high earnings faster than the industry average.
With this in mind, Amazon shares have a PEG ratio of 1.50 as of 15/09/2021. A PEG ratio greater than 1 could suggest the company’s shares are overvalued at the current growth rate, or it could be a sign of potential growth. The PEG ratio gives a wider perspective than just the P/E ratio, as it provides more insight into the long-term potential growth of the e-commerce giant.
Let’s compare Amazon’s Forecast 12 month forward PEG Ratio with several other blue-chip stocks listed on the NASDAQ exchange:
|Company Stock||PEG Ratio|
|Amazon (NASDAQ: AMZN)||2.42|
|Apple (NASDAQ: AAPL)||2.13|
|Facebook (NASDAQ: FB)||1.17|
|Alphabet (NASDAQ: GOOGL)||1.88|
|Netflix Inc (NASDAQ: NFLX)||1.83|
|eBay Inc (NASDAQ: EBAY)||2.09|
|Paypal Holdings Inc (NASDAQ: PYPL)||3.74|
What is EBITDA?
EBITDA is an acronym that stands for earnings before interest, taxes, depreciation, and amortization. EBITDA is an earnings metric that helps to understand a company’s ability to create cash flow for its shareholders and for evaluating its operating performance.
All in all, EBITDA is a useful tool to decide if a company is worth investing in but it’s not a substitute for other key metrics like net income and P/E ratios. Furthermore, the items that are excluded from EBITDA still have financial consequences on a company’s profitability and growth.
According to WSJ.com, Amazon’s Enterprise Value to EBITDA is $41.39 billion. To put that into context, let’s compare and contrast the Enterprise Value to EBITDA metric of other popular NASDAQ stocks:
|Amazon (NASDAQ: AMZN)||$41.39B|
|Apple (NASDAQ: AAPL)||$26.05B|
|Facebook (NASDAQ: FB)||$18.40B|
|Alphabet (NASDAQ: GOOGL)||$19.77B|
|Netflix Inc (NASDAQ: NFLX)||$16.36B|
|eBay Inc (NASDAQ: EBAY)||$12.09B|
|Paypal Holdings Inc (NASDAQ: PYPL)||$59.58B|
Amazon’s Financials – Fundamental Data
|Fundamental Data||Price (USD)|
|Bid||3,469.64 x 800|
|Ask||3,471.28 x 1100|
|Day’s Range||3,446.14 – 3,478.08|
|52 Week Range||2,871.00 – 3,773.08|
|Beta (5Y Monthly)||1.14|
|PE Ratio (TTM)||60.60|
|Earnings Date||Oct 27, 2021 – Nov 01, 2021|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||4,154.33|
Amazon ESG Score
ESG is an acronym for environmental, social and governance. These are the three criteria used to measure a business’ sustainability performance. Companies that are committed to ESG initiatives typically publish measurable results in regular sustainability reports. Nevertheless, some ESG reports are more reliable than others. Most market analysts recommend searching for sustainability reports that follow ESG regulations set by the Global Reporting Initiative as well as the United Nations Principles for Responsible Investment.
Greater ESG Commitment, greater returns
Some recent research suggests that ESG stocks yield competitive or better financial returns compared to non-ESG-committed companies.
Amazon’s ESG Risk Ratings
Let’s take a closer look at Amazon’s environmental, social and governance risk ratings according to Yahoo Finance.
|Total ESG Risk Score||Environment Risk Score||Social Risk Score||Governance Risk Score|
|31 | 63rd Percentile||6.7/100||14.6/100||9.7/100|
- Environmental Risk Score – Amazon’s environmental risk score of 6.7 indicates that the NASDAQ giant is one of the leading companies when it comes to reducing its carbon footprint. A lower environmental risk score means it’s doing its part for environmental sustainability.
- Social Risk Score – Amazon’s social risk score of 14.6 could imply that the company has good management procedures in place, catering for both its employees and the communities it interacts with.
- Governance Risk Score – With a governance score of 9.7, the ESG rating for Amazon could suggest that the company has effective leadership, adequate board independence, and sound business ethics.
If you’re looking to sell and short Amazon shares we’ll show you how to do so in a few simple steps:
- Open a CFD or spread betting account with a top-rated CFD, forex, and crypto broker like eToro
- Type the ticker AMZN into the search bar
- Select your position size
- Tap on Sell
- Authorize the position and monitor it. You might also want to place limit orders to help minimize potential losses.
Right now, investors are holding short positions on roughly 4.9 million Amazon shares. In financial terms this is also referred to as short interest. This represents a drop of -3.34% when compared to the previous month’s short volume of approximately 5.1 million shares.
What is SIR? (Short Interest Ratio)
Amazon’s short interest ratio is calculated when you divide the amount of shares currently shorted by the mean amount of shares traded within standard market hours. Amazon’s short interest ratio currently sits at 1.5. Put simply, for every 1,000 shares that are traded every day, about 15 of them are held short.
|Company Stock||Short Interest Ratio|
|Amazon (NASDAQ: AMZN)||1.5|
|Apple (NASDAQ: AAPL)||1.2|
|Facebook (NASDAQ: FB)||2.0|
|Alphabet (NASDAQ: GOOGL)||2.5|
|Netflix Inc (NASDAQ: NFLX)||3.0|
On the other hand, Amazon’s short interest ratio could also be measured against the quantity of outstanding shares. As such, Amazon’s short percent of float (tradable shares that aren’t held by long-term investors) can be expressed as 1.13%.
A low short interest ratio typically hints at positive forecasts for the share price, with fewer investors interested in shorting Amazon shares.
Step 3: Open an Account and Deposit Funds
So now that you have a bit of background information about Amazon, you are now ready to take the next step. As such, we are now going to take you through the steps of buying Amazon shares online in the UK. While there are many suitable brokers to choose from, we have decided to show you how to invest in stocks with eToro.
This is because the FCA-regulated platform allows you to buy Amazon shares without paying any fees or commissions, and you can instantly deposit funds with a debit/credit card or e-wallet.
So, the first thing that you need to do is head over to the eToro website and open an account.
67% of retail investor accounts lose money when trading CFDs with this provider.
On top of choosing a username and password, you will need to provide a range of personal information. This will include your full name, home address, date of birth, and contact details.
You will also be asked to verify your identity. You can do this at a later date if you are not planning to deposit more than €2,000 (about £1,800). But, you will need to do this before you make a withdrawal. As a result, it’s best to upload the required documents now.
This will include your:
- Passport or Driver’s License
- Recent Utility Bill or Bank Account Statement
You will also need to meet a minimum deposit threshold of just $50. Furthermore, with fractional share trading you can buy $50 worth of Amazon shares.
In terms of supported payment methods, eToro accepts the following options:
- Debit Card
- Credit Card
- UK Bank Transfer
- Rapid Transfer
- Klarna / Sofort Banking
- Online Banking – Trustly (EU region)
Once you confirm the deposit, the funds will be credited instantly (apart from a bank account transfer).
Now that you have funded your brokerage account, you are ready to buy Amazon shares. If opting for eToro, all you need to do is enter ‘Amazon‘ into the search box at the top of the page, and then click on the result that pops up (like below).
After that, click on the ‘Trade’ button.
67% of retail investor accounts lose money when trading CFDs with this provider.
To complete the investment process, you will be asked to enter your total stake in USD. As long as the amount is above $50, you can invest as much or as little as you please. Finally, click on ‘Open Trade’ to buy Amazon shares!
Note: If you are buying Amazon outside of standard market hours (9.30 am to 5 pm, Eastern Standard Time), you will need to click on ‘Set Order’. Your share purchased will then be completed when the markets open.
So, wrapping everything up, are Amazon shares a buy or a sell opportunity? We definitely feel it is the former, as there is no reason to bet against the eCommerce giant in 2021. The innovation that Amazon has shown through new services and tweaks to its business model have allowed the company to flourish during the hard times brought about by the COVID-19 pandemic – and these changes look set to help boost share price further going forward.
As recently as May 2021, the Wall Street Journal reported that Amazon have agreed to purchase the movie studio MGM for a total of $6.5 billion. Although this seems like a significant outlay, it is actually a shrewd acquisition by Amazon; by purchasing MGM, they are looking to directly compete with the likes of Netflix and Disney in the video streaming sector. If Amazon can gain further market share, it’ll mean great things for revenues – and ultimately, the share price.
In addition, Amazon’s advertising and cloud-computing services just continue to grow and provide large streams of revenue. With cloud computing expected to grow around 18% per year, there’s a great chance for Amazon to lodge itself as the number one player in this sector. Adding to this credibility, many top ratings companies have recently lifted their price targets for Amazon – with JPMorgan predicting it to reach between $4,350 and $4,500!
In summary, we do believe Amazon is a good buy opportunity. The long term prospects of the company are solid, and the constant innovating in products and services is ensuring Amazon don’t grow stale. If they can continue growing their AWS branch, and challenge Netflix and Disney in the streaming services arena, then we could certainly see some further bullish momentum over the next 6-12 months.
Looking to invest in other tech shares? Check out the companies below.
- Micron Technology