Case Study

Please Answer the following questions…..

1. Amazon has gone on record that they will continue to diversify into categories such as RX Drugs, Financial Services, and a more elaborate stake in food items.  Do you think this level of diversification is good for Amazon, or bad? What potential obstacles do you feel they may face?  Provide concrete supporting evidence to support your position.

2. Over the next 10 years, do you feel Amazon might face stiffer competition?  Be specific – which companies may pose a challenge?

3. Amazon has become known as a RICH person’s stock due to its high price point.  Do you think Amazon should come out with a Class B – lower priced stock such that average people can purchase shares?  What are the pros and cons of such a move?

4. List the following key financial performance ratios for Amazon as of 12/31/19 (3/31/20 is also be acceptable):

52 week high and low for stock price
Stock Beta
P/E Ratio (price/earnings)
Stock EPS (earnings per share)
ROA
ROE

What conclusion can you draw from these data?  Would you invest in Amazon stock?  If so, why?  If not, why not?

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