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Amazon Payments: The Next Catalyst for AMZN Stock? - Stocks In The News

Using a smartphone to calculate data

One of the greatest growth stories over the past decade has undoubtedly been Amazon.com ( AMZN ). The online retailer has grown to an incredible size, and despite not really making any profits, saw its share price surge as well.

Shares of the company finally hit a roadblock this year though, as a horrendous earnings miss derailed the stock. In fact, the stock is down nearly 15% YTD, while earnings estimate revisions aren't exactly looking favorable right now either.

Fresh estimates put out on the company's stock have almost universally been lower in the past two months, pushing the current full year estimate sharply lower in the process. Clearly, it appears as though a fresh catalyst will be needed in order to jumpstart this behemoth's shares once more, and pull AMZN out of the doldrums.

One possible way that Amazon can become a growth name again is with its rumored smart phone which many believe will be unveiled June 18 th . However, the real next great thing from Amazon may already be spreading; Amazon Payments.

What is Amazon Payments?

This new service looks to allow customers to use their Amazon login information in order to pay for goods and services on a number of sites across the web. Amazon is billing this as a way to safely pay across the web, a way for small companies to leverage the trust built up in the Amazon name, and a more convenient way to do so as well, since you only have to remember your Amazon login instead of a bunch of different user names and passwords.

Amazon appears to also be getting into the personal payment business as well, allowing users to send or receive money using payment info from your Amazon.com account. Clearly, Amazon is making a big, broad push into this space and is hoping to capture share in this increasingly competitive and important market.

Competition

Speaking of competition, the mobile payment space is rife with other choices, the biggest of which is eBay's ( EBAY ) PayPal division. PayPal is now the most important division at eBay, and with close to 150 million active accounts, it is already a big name in the space.

Other big names are either getting involved in the space, or are taking steps to make their presence felt as well. However, few have the retail focus and broad market appeal that Amazon has with its online store, giving Amazon a huge leg up.

Many analysts are actually calling this another shot across the bow at PayPal, and that this move by Amazon is really heating up the mobile payments space. This could also tie in nicely to Amazon's rumored phone, allowing for easy purchases of apps, as well as good and services via the Amazon platform.

Bottom Line

With close to 250 million accounts, this seems like a natural next step for Amazon, and ones that fits in nicely with its other businesses. Plus, if Amazon can unseat PayPal as the mobile payment king, it will only increase Amazon's stranglehold on the world of e-commerce.

It remains to be seen if this business can move the needle for Amazon though, as it will be tough to break into this space and unseat the giant of PayPal. Still, this is a new source of revenue that really leverages what Amazon has already done so well, and it looks to fit very nicely with some of Amazon's latest ventures.

In other words, it is possible that this Payments system and the new phone can help to get AMZN back on track as both businesses look to help Amazon round out its product offering, while the payments at least looks to help improve profitability. Investors should definitely pay attention to estimate revisions here though, as this will likely signal if AMZN can make the leap back into buy ranked territory, or if more trouble is ahead for the company.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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