How To Buy Amazon Stock – Delivering Profits
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Who knew Jeff Bezos' idea of online book shopping at discount prices would grow to become the dominating online beast it is today? Anything and everything you can think of buying can be bought on Amazon.com. Want it tomorrow? That is no problem because Amazon Prime will give you free overnight shipping.
While the world was going into lockdown, finding ways to get groceries or items we needed without leaving our homes sent us scurrying to Amazon. Anyone smart enough to put $10,000 into Amazon when it launched in 1997 at $18 a share is now a millionaire – those shares were worth $12 million in 2020.
But Amazon is nowhere near slowing down. Not only did it join the streaming music and movie ranks – releasing new films earning award contention – it's trying to grow in the electric vehicles market, among other diversified businesses.
Think you missed your chance? Not entirely.
In this article
Step 1: Finding a broker that offers Amazon stock
Several online brokers offer consumers a way to place stock market orders easily at any time and from anywhere. From these trading platforms, you can find information on the stocks, what stock price they’re trading at on the NASDAQ, how to place limit orders, and more.
Buying fractional shares may be right if you can't afford Amazon's stock. Brokers who allow for fractional shares give you a chance to buy a piece of one share for a price you can afford. As you can afford to invest more, you can buy more and get closer to the full share.
Here’s a look at three online stock brokers that allow you to buy Amazon stock.
Stash
Using Stash, investors have access to various stocks, bonds, and ETFs that can be invested in regular investment accounts, retirement accounts, and custodial accounts. Setup is quick and easy, and the platform is intuitive. Stash offers two plan levels costing $3 or $9 per month. This also gives you a debit card account and a life insurance policy.
Trades are commission-free with all plans. Shares can be purchased for as little as $1. Fractional shares are available, so even if you can’t afford a full share of Amazon stock, you can invest an amount that fits your budget.
Pros and cons
Pros
- Start with as little as $3
- Can invest in fractional shares
- Easy-to-use platform
- Free rewards debit account
- Set up Auto-Stash to invest regularly
Cons
- Monthly fees range from $3 to $9
- High EFT expense ratio
- Doesn’t have automatic rebalancing
Robinhood
Giving everyone easy access to investing, Robinhood offers new members a free share of stock at signup. Accounts are free to set up and maintain. An optional $5 per month for Robinhood Gold gives you access to additional features, including trading on margin and detailed research reports from Morningstar.
No commission is charged for buying stocks, but small regulatory fees are passed on to investors when you sell. Robinhood does allow users to purchase fractional shares, which means you can start investing today, even if you have only $5 to invest.
Pros and cons
Pros
- Fee-free trades
- No minimum to get started
- Can invest in crypto
- Great for beginners
- No monthly fees
Cons
- No retirement or custodial accounts
- Limited customer service
- Commission free stock trading.
- No account minimum.
- Trade stocks, options, ETFs, and more.
- First stock free.
Step 2: Research Amazon shares
Amazon stock has come a long way since its initial offering in May 1997. The IPO shares sold for $18 each and had a slow start as the online bookseller began branching out into other retail categories on its way to creating the Amazon that we all know and love today.
Between 1998 and 1999, Amazon carried out three stock splits, two with a 2:1 ratio and one that was 3:1. When a 2:1 split occurs, investors’ shares double, while the value of each share is halved. The only difference in a 3:1 split is that instead of doubling, investor shares tripled. For the buy-and-hold investor, this is a huge benefit. More recently, in March 2022, Amazon announced a 20:1 stock split.
Amazon stock has continued to rise over the years, with ups and downs as the economy and stock market fluctuate. It was the second company to reach $1 trillion in market capitalization. (Apple was the first.) Of course, 2020 was a great year for the company, with many brick-and-mortar retailers closed and people turning to online shopping as their preferred way to stay safe from the global pandemic.
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Amazon price history
Amazon's stock price has enjoyed a meteoric rise and has been steadily moving upward over the past year. The stock trades hands at $179 (May 2, 2024).
Here's how the stock price has progressed over the last 12-month period.
Amazon dividend info
Unfortunately for investors, Amazon does not pay dividends to shareholders. While there is plenty that could be paid out as dividends, Amazon chooses to reinvest it to further the company's growth. The company returns money to shareholders in the form of stock buybacks. It announced a $10 million buyback in 2022.
Best features of Amazon stock
Amazon shows promise of continual growth in the coming years. Here are a few reasons why it’s worth considering:
Amazon is capitalizing on the shift in consumer spending. As more people get used to the convenience and ease of shopping online, Amazon may continue to see sales rise. Its platform is very “sticky” in that it draws people back regularly thanks to features that let you easily reorder past purchases, its subscription program that lets you set and forget pretty much any consumable item that you need on at least a semi-regular basis, and movie and book subscription programs that give you all-access passes to content libraries for low monthly fees. And, of course, if you ’re an Amazon Prime member, you can’t pass up the free one- or two-day shipping on orders.
Amazon is continually growing and innovating. From its humble start in Bezos’ garage in Seattle to hundreds of warehouses filled with its own devices like Kindle and Echo to holding inventory for third-party fulfillment by Amazon sellers, there seems to be no limit to how Amazon will continue to grow and integrate into our lives even more. The Amazon Pharmacy is just one of the latest ventures the company has started as it attempts to cash in on the billion-dollar pharmaceuticals industry.
Amazon Web Services (AWS) is the leader in cloud services. With more companies going remote and entrepreneurship on the rise, there are plenty of opportunities for AWS to continue breaking revenue records with their services for cloud computing and e-commerce.
Amazon is thriving on advertising. With millions of users flocking to the Amazon website on a daily basis, the company has seen a surge in advertising revenue. Marketers will be keen to put money into Amazon advertising for higher visibility and conversions.
Step 3: Open an account & buy Amazon shares with Stash
Are you ready to get in on investing in Amazon stock? When you open a brokerage account with Stash, you can own AMZN stock (ticker symbol: AMZN), even if it’s only $5 or $50 worth, in under 10 minutes.
You start by going to the Stash website, entering your basic personal info, and answering questions about your employment, savings goals, and investing experience. Your answers to the questions guide the app to create a more customized experience.
Let’s take a look at what’s involved in the processes.
After entering your name, email, address, and phone number, you will answer several questions about the financial areas you want to focus on, your experience with investing, and more. While there are several pages to click through, each page is just one question and probably won’t take you more than 30 seconds to answer before you click the “next” button.
First, select one or more areas where you want to expand your financial growth.
Next, you’re prompted to choose the plan you’d like to use, and an easy-to-read chart shows the differences between plans. The lowest-cost plan for those who just want to get started is $3 per month, while a more robust plan that gives you more options and lets you add custodial accounts for your kids is $9 per month.
Then, you’re prompted to pay for your plan. You can choose to pay monthly or for 12 months. There are no discounts if you pay for a whole year at a time.
On the next page, you’re asked about your current employment status.
Then, there’s a question about your estimated net worth. It’s just an estimate, so breaking out your financial records is unnecessary. Remember, your net worth is what you own minus what you owe. So, if your home is worth $150,000, but you have a mortgage for $100,000, you can count $50,000 towards your net worth.
The next page asks about your tax filing status.
Then, you’re prompted to answer questions about your current retirement savings. You can only choose one, even if you invest in multiple types of accounts that are earmarked for your golden years.
Next is the question of whether or not you pay your bills on time. Just select the one that’s the most accurate.
This next question asks how long your savings will tide you over with your current expenditures if you have no regular income. Pick the one that best reflects your savings accounts and any non-retirement accounts.
Next, share your confidence level in saving and investing to meet your long-term goals.
Also, share how much experience you have with investing.
On this next page, use the slider to indicate your preference for stability and growth. If you prefer less risk, slide the dot to the left. Moving it to the right shows that you’re more risk-tolerant. Leave it in the middle if you prefer an equal mix of growth and stability.
Hang in there; you’re almost done. Just a few more questions! This next one asks for how long you plan to invest your money. Remember that if you need the money in less than five years, single-stock investing isn’t the best place to put your hard-earned money for the short term, just in case the market dips down. We know that historically, it recovers, but that takes time.
Now, you must disclose if you or any close family work in the financial industry.
Finally, enter your Social Security Number to set up your account.
Lastly, review the terms and agreements. Once you’ve done that, click “Accept & Continue,” and you’re ready to start investing in Amazon stock!
Now that your account is set up, you’re ready to start investing! To get started, choose “invest” from the menu and search for the stock that interests you.
FAQs
How much were Amazon shares when the company first went public?
When Amazon went public on May 15, 1997, each share was worth $18.
How much does it cost to buy Amazon shares today?
Each Amazon share is worth $179 as of May 2, 2024.
Does Amazon pay dividends?
No, Amazon does not pay out dividends to its shareholders.
What is the minimum number of Amazon shares that I can buy?
At more than $150 per share, it’s not always financially possible for investors to buy a whole share. Fortunately, many investing platforms allow you to buy fractional shares. So you can decide to buy $1000 worth of Amazon stock, which means you have roughly 1/3 of a share.
The bottom line
While past performance does not indicate what the future will bring for Amazon’s share price or any other stocks or mutual funds, it’s always good to have plenty of diversification in your portfolio. Buying Amazon stock through a stock trading platform is one way to implement your investment strategy.
Of course, it’s smart to talk with a financial advisor to help you better understand Stash or any other trading platform before you begin.
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Writer
Charlotte Edwards is an educator-turned-freelance writer based in Beijing, China. She writes personal finance and parenting content for both digital and print publications around the world.
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