3 Reasons to Love Amazon in 2013
Jan 28th 2013 1:31PM
Updated Jan 28th 2013 2:40PM
Shares of Amazon.com climbed to a fresh 52-week high last Friday to end the week at $284 a share. This type of move is typically reserved for companies posting record quarterly results -- only Amazon hasn't reported yet. The e-commerce company is set to release its fourth-quarter 2012 earnings on Tuesday. However, it seems that upbeat results from industry peers such as eBay and Google roused investors, who sent Amazon's shares soaring ahead of its earnings.
Similar to Amazon, eBay hit a new 52-week high on Friday. Shares of the online services company are up more than 10% year to date, thanks to a strong fourth-quarter earnings beat. eBay's mobile business finished the year up more than 100% with $13 billion in volume. The company's PayPal unit also delivered blowout growth, counting $14 billion in transactions for the year.
Google was another Internet company that put up impressive numbers in 2012. Google bagged $12 billion in advertising revenue for its fourth quarter -- a 19% increase from the year-ago period. However, as consumers spend more money online, it is Amazon that stands to benefit the most. In anticipation of Amazon's earnings announcement tomorrow, here are three reasons it's good to be an Amazon shareholder in 2013.
1. Original content
Amazon is taking aim at Netflix this year with plans to release its own original programming. The Verge broke the news earlier this month that Amazon is planning to develop and distribute a series based on the 2009 cult smash Zombieland. Additionally, IHS reported that Amazon plans to develop and market six sitcom pilots on Amazon instant video. Viewers will be able to watch the episodes for free and vote for their favorites.
The online retailer will then use the results to decide which shows to pick up for a full season. This is a smart strategy because it involves viewers in the production process and helps Amazon differentiate itself from competitors such as Netflix. Those familiar with Netflix know that it too is developing original content. In fact, Netflix's own House of Cards is set to debut Feb. 1.
True, this may be Amazon's first foray into producing in-house content, but the e-tailer is no stranger to publishing and distributing digital media. If there is one thing that Amazon knows best, it's how to sell things online -- lots of things. Viewers who subscribe to Amazon Prime already have access to thousands of digital movies and TV shows via Amazon Instant Video, at no additional cost.
2. B2B boom
Last year, Amazon pulled back the curtain on its new business-to-business website: AmazonSupply.com. This year, Amazon should start to see the fruits of its labor, as the company scoops up more commercial and industrial customers. AmazonSupply offers more than 500,000 products ranging from office supplies to more specialized equipment like centrifuges.
By offering free two-day shipping on every order over $50, Amazon is hoping to steal market share from business-to-business rivals including Staples and Lowe's. We've seen the e-commerce giant unseat more-established peers before in the retail space. Therefore, I suspect it's only a matter of time until the company's investments in AmazonSupply start to pay off as well.
3. Amazon Web Services
The company's cloud computing platform offers yet another potential high-growth channel for Amazon. Sure, it's had to work out some kinks along the way. But in the year ahead, Amazon should benefit from more businesses switching from costly IT infrastructures to more scaleable, low-cost options like those offered by Amazon Web Services.
The pay-as-you-go platform lets companies run their software on virtual servers. Today, hundreds of thousands of businesses in 190 countries around the world use Amazon Web Services.
The breadth of IT services that Amazon now offers in the cloud make it easy for customers from all sorts of industries to find the solution that best fits their company's needs. In this regard, Amazon shouldn't have any problems adding new customer accounts to its Web Services division in 2013.
There you have it: the three things I'm most excited about at Amazon as we head full-speed into the new year. Still, the stock's sky-high valuation has many investors worried that it's the company's share price that will get knocked down instead of competitors'.
To learn when to get into this stock and when to sell, I encourage you to check out the Fool's new premium report on Amazon. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.
The article 3 Reasons to Love Amazon in 2013 originally appeared on Fool.com.Fool contributor Tamara Rutter owns shares of Amazon.com and Amazon.com. The Motley Fool recommends Amazon.com, eBay, Google, Lowe's, and Netflix. The Motley Fool owns shares of Amazon.com, eBay, Google, Netflix, and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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