Markets

Why Amazon Stock Soared 76% in 2020

What happened

Shares of Amazon.com (NASDAQ: AMZN) surged 76% higher last year, according to data from S&P Global Market Intelligence. Demand for the e-commerce juggernaut's services rose sharply during the coronavirus pandemic, and it's set to grow further in the years ahead.

So what

COVID-19, and the social distancing measures enacted to combat the spread of the disease, resulted in the temporary closure of a huge swath of the traditional retail industry. Amazon and other e-commerce companies stepped up and supplied people with the food and other essentials they needed during the crisis. Online retail sales boomed, and Amazon's profits skyrocketed.

A person is pointing to an upwardly sloping digital chart.

As e-commerce growth accelerated, Amazon generated hefty gains for its shareholders in 2020. Image source: Getty Images.

In all, Amazon's sales climbed 37% year over year to $96.1 billion in the third quarter. Its net income, meanwhile, nearly tripled to $2.1 billion.

Now what

Many people who made their first e-commerce purchase during the pandemic will continue to shop online. And those who experienced Amazon's broad selection of goods, low prices, and fast delivery times are likely to remain loyal customers.

Investors, therefore, should expect the e-commerce titan to grow briskly in the coming years, while continuing to deliver handsome gains to its shareholders along the way.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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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