Amazon.com Inc. (AMZN) has grown from a humble bookseller that Jeff Bezos started in his garage to the biggest e-commerce company on earth, complete with web services and advertising business verticals.
Over the last five years, Amazon’s share price is up more than 50%. Of course, that’s folloing the big market downturn of 2022. At the time of the stock’s last all-time high, in November 2021, shares of AMZN had gained more than 250% over the previous five years.
If those numbers have you eager to hitch your wagon to Amazon, here’s what you need to know.
How to Buy Amazon (AMZN) Stock
1. Open a Brokerage Account
To buy Amazon stock, you’ll need an online brokerage account. If you don’t have one already, check out our list of the best brokerages and best investment apps to jumpstart your search. Most brokerages these days allow for fee-free stock trading, but make sure to keep an eye out for any fees and account minimums.
You’ll also want to think about your goals for investing to figure out what kind of account you want.
If you’re aiming to save for retirement, choose an individual retirement account (IRA). It lets you avoid capital gains taxes in exchange for limits on how and when you can use the funds. Withdrawals made for other uses or at other times may incur taxes or penalties.
If you’re saving for a more general goal, like wealth building or a home down payment, you may simply want a taxable investment account that allows you to access your money at any time with no penalties.
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2. Decide on an Investment Budget
Even Bezos doesn’t have an unlimited amount of money to pour into AMZN. Think through these questions to figure out how much to invest in Amazon.
- What’s your budget? Make sure you have your bases covered before you start investing in Amazon. That means having enough to pay your bills, build an emergency fund and save for retirement. Once these are covered, allocate whatever’s left over to buying Amazon stock and other investments.
- What’s AMZN’s price? Investing in Amazon stock is much less expensive than it used to be. Before the most recent Amazon stock split in 2020, one share was valued at nearly $2,800. After the 20-for-one split, a single share is valued at around $100.
- What’s your investing strategy? People generally invest one of two ways: With a lump sum purchase or in smaller, steady amounts over time. This latter method, called dollar cost averaging, may help you pay less per share on average over time. It puts your money to work and growing in the stock market as soon as possible, instead of forcing you to wait while you build up a specific sum.
- What other investments do you have? Chances are AMZN isn’t going to be your only investment. So you’ll want to consider how it fits in with your other holdings and your plans. “The ideal [Amazon investor] is someone who is willing to think long-term, similarly to the company’s management style,” says Tom Forte, managing director and senior research analyst with D.A. Davidson and Company. “It’s someone who believes it will continue to find new business opportunities to maintain its long-term sales growth and premium valuation.”
3. Research Your Investment
Before you pull the trigger and buy Amazon stock, do some research to make sure you’re comfortable with the company’s direction and performance.
As a publicly traded company, Amazon is required to file information about its finances with the U.S. Securities and Exchange Commission (SEC). You can find these annual (10-K) and quarterly reports (10-Q) on Amazon’s investor relations page or by searching for Amazon on SEC.gov.
In addition, you can complement these data points with expert analyses, like you might find on Fidelity, Morningstar or Forbes, to determine if Amazon seems to be a financially sound company you want to invest your money in.
4. Place an Order
If you’re ready to buy Amazon stock, log into your online brokerage account or trading app. Then type in Amazon’s ticker symbol (AMZN) and the number of shares you want to buy or the amount of money you want to invest.
You may also have to pick what type of order you want to make. Two of the most common types are market orders and limit orders.
- A market order buys or sells shares of a stock at its current price on the market.
- A limit order only buys or sells shares if the stock reaches a specific price that you set.
Like many technology companies, Amazon is traded on the Nasdaq exchange, which has normal trading hours of 9:30 a.m. through 4:00 p.m. ET, Monday through Friday. Your brokerage may provide access to additional pre- and after-market trading hours.
5. Regularly Review Your Investment’s Performance
Whether you invest in just one company or hundreds, it’s a good idea to review your investment’s performance on a regular schedule, whether that’s monthly, quarterly or annually. That way, you can see how your account is doing and evaluate whether you need to make any adjustments.
To judge how your Amazon investment is performing, you can compare its performance to those of benchmark indexes, like the Nasdaq 100 or S&P 500. You might also track the financial data provided in its public filings to gauge how Amazon handles its finances over time.
How to Sell Amazon Stock
Whether you want to use your money to make a major purchase or to invest in another company, there will come a time when you want to sell your shares of AMZN stock. To do so, simply enter your brokerage or investment app trading platform, type in the ticker symbol and select the amount you want to sell.
If you’ve earned substantial profits, it may be a good idea to meet with a tax professional, like a certified public accountant (CPA), to strategize ways to manage your potential taxes.
How to Invest in Amazon with an Index Fund
Although investing in individual stocks can be appealing, investing in just one company can leave you vulnerable to potentially dramatic swings in prices. That’s why financial experts recommend most people invest in a diversified mix of index funds or exchange-traded funds (ETFs) that hold hundreds of companies’ stocks.
Luckily, AMZN is very easy to find in these funds: It usually represents about 7% of holdings in Nasdaq 100 funds and 3.5% of S&P 500 funds.
Amazon Stock Split History
Stock splits provide companies a chance to decrease share price while increasing their stock’s liquidity. Existing shareholders receive an amount of shares at the new price equivalent to the monetary value of shares they held at the previous price.
For example, if a stock is trading at $180 per share, and the company offers a two-for-one stock split, a shareholder currently holding a single share at $180, following the split, would now hold two shares valued at $90 each.
Amazon has split its stock four times since going public on May 15, 1997.
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Date
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Split
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June 6, 2020
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20:1
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September 2, 1999
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2:1
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January 5, 1999
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3:1
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June 2, 1998
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2:1
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Amazon’s most recent stock split on June 6, 2020 was an incredible 20-for-one. This dropped the price of the company’s individual shares from nearly $2,800 to approximately $100.
Previously, Amazon stock split at two-for-one on September 2, 1999. It also split earlier that same year on January 5, 1999 at three-for-one. The company’s first stock split, at two-for-one on June 2, 1998, was slightly more than a year after its initial public offering (IPO).
Frequently Asked Questions (FAQs)
Is Amazon a buy, sell or hold?
Analysts vary on their opinions of Amazon, but most analysts consider the stock an overall buy. Your personal decision to buy Amazon stock should rely on your own due diligence and investing goals.
Is it worth buying one share of Amazon?
Choosing to buy a single share of Amazon depends on your own portfolio needs, risk tolerance and budget. Amazon is not as expensive as it once was, but as a leading tech company, the stock can still be prone to price swings dependant upon external factors.
Should I buy before or after a stock split?
Since stock splits don’t affect a company’s fundamental value, the point at which you choose to invest in a company—before or after a stock split—has to do with your own investment thesis and risk tolerance. A company’s share price may increase after a split is announced, but theoretically, it should settle back down to the stock’s fair market value before the actual split occurs.
How many times has Amazon stock split?
Since going public on May 15, 1997, Amazon stock has split four times. The company issued a 20-for-one stock split on June 6, 2020, a two-for-one split on September 2, 1999, a three-for-one split on January 5, 1999 and a two-for-one split on June 2, 1998.
Does Amazon pay dividends?
No, Amazon does not currently pay a dividend. In fact, the company has never paid a dividend since going public on May 15, 1997.
Can you buy a fractional share of Amazon stock?
As with many companies today, investors can purchase fractional shares of Amazon. If you’re interested in doing this, you’ll want to make sure your brokerage offers fractional shares. Then, you’ll want to purchase the fraction of a single Amazon share that’s within your budget.
Is Amazon a good long-term investment?
Although past performance is no guarantee of future results, Amazon has a strong historical track record of positive returns. If you’re considering adding Amazon to your portfolio, you’ll want to do your own due diligence and consider your portfolio’s needs, your risk tolerance and your budget.
