On Tuesday, Amazon stock hit a new all-time high. The stock soared roughly 5% to go slightly over $2,275.
The company just announced that it would hire 175,000 people to meet increased demand, which has likely helped to boost the stock.
The unprecedented health crisis we are facing will likely change consumption habits long after the coronavirus pandemic is over. It will probably take months for people to feel comfortable returning to large gathering places like grocery stores and shopping malls.
Amazon is in an enviable position to take advantage of these changes in shopping habits. People are turning to online shopping to meet their needs as stores are closed.
As a recent Jefferies survey revealed, Amazon is the only retailer among the major e-commerce companies the Wall Street firm covers (including eBay, Chewy, and Etsy) where customers are spending more money since the coronavirus outbreak began.
A record 16.8 million Americans have sought jobless aid in the past three weeks. And Amazon is one of the rare companies to hire workers amid the pandemic.
The retail giant has announced plans to hire 175,000 new employees over the past month, bringing its entire workforce to 973,000. There were only 33,700 Amazon employees in 2010.
This influx of workers in its distribution and delivery centers will allow the company to deliver essential – and non-essential – supplies to a nation paralyzed by the coronavirus.
While the higher demand is increasing sales, Amazon is struggling to keep up with the growing demand for its online shopping service. The company has temporarily stopped accepting new grocery customers, while Prime subscribers have complained about infuriating shipping delays.
Amazon said in a blog post that it recently increased order capacity by 60% in the past few weeks and is adding more.
Amazon shares have soared nearly 20% year-to-date. With a P/E of 88.78 and a five-year PEG of 1.57, shares are expensive.
Yet of the 47 analyst recommendations tracked by Yahoo Finance, 43 still maintain a buy rating on Amazon stock.
Analysts anticipate an average of $334 billion in revenue in 2020 (against $280.5 billion in 2019, an increase of 19%).
Demand will likely continue to be high post-coronavirus, but investors should expect that some customers might prefer to go back to brick-and-mortar stores.
So the stock price should continue to rise, but it will likely be at a slower pace.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.