As consumers continue to wrestle with inflation, one of the ways Amazon could support its revenue generation is through retail media advertising. Data from a Barron’s article noted that retail advertising revenue hit $80 billion globally in 2022 (excluding China).
“We see a $130 billion opportunity in retail media advertising by 2025,” said Morgan Stanley analyst Matthew Cost wrote. It “allows advertisers to drive better conversion by leveraging retailers’ customer data and ultimately generates more ad revenue for the retailers.” Retail media ads globally excluding China totaled $80 billion in 2022, according to Cost.
At the forefront of the growth is Amazon, which could use this extra revenue source amid rising prices as a result of inflation. In a Motley Fool article late last year, it was noted that while “the overall advertising industry struggles, marketers are looking to the efficient spending opportunities retail media networks provide. Analysts expect ad spend through online retailers to grow 25.8% to 28.4% next year, and the market could reach $100 billion in the U.S. alone by 2026”, and that “Amazon is the dominant force in the market.”
Given this, it could continue to give investors bullish vibes. The online retailer has already proven that it could profit despite economic challenges, especially within the last five years.
“During five years of share price growth, Amazon.com achieved compound earnings per share (EPS) growth of 17% per year,” Yahoo! Finance noted. “We note, however, that extraordinary items have impacted earnings. The EPS growth is more impressive than the yearly share price gain of 7% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.”
2 Ways to Trade Amazon
To amplify gains, traders could use a margin account and obtain more shares with leverage. There are also exchange traded funds (ETFs) from Direxion that can offer increased exposure to Amazon stock that’s already baked into the fund.
For bullish moves, consider the Direxion Daily AMZN Bull 1.5X Shares (AMZU). AMZU seeks 150% exposure to Amazon stock, giving bullish traders added leverage to extract more gains from their convictions.
Inverse ETFs also allow traders to take the opposite side should the stock’s direction trend downward. As such, traders can use the Direxion Daily AMZN Bear 1X Shares (AMZD), which provides inverse exposure to Amazon stock so traders can easily profit from the downside for any negative market movers like a worse-than-expected earnings report.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.
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