Amazon (AMZN 3.43%) stock sorely underperformed the broader market in 2022, falling nearly 50% vs. the S&P 500's 19% decline. It's off to a better start in the new year, ending the first day of trading slightly up.
How should investors view it going into 2023? These charts give investors a few clues.
1. Amazon's market share is unbeatable
Amazon's bread and butter is still e-commerce despite its entry into a slew of new businesses. It hosts more than 200 million Prime accounts, and growing Prime accounts is what drives sales and allows it to enter other growth areas.
It has nearly 40% of the total U.S. e-commerce market, with its closest competitor clocking in just over 6%. There's no contest here, and management continues to develop new solutions and improve its services to maintain its unmatchable edge.
Amazon U.S. e-commerce market share as of June 2022. Image source: Statista.
Amazon's e-commerce market share may have been as high as 50% in 2021 when digital shopping soared and other companies scrambled to expand their online presence. It has since fallen as it deals with internal challenges, external headwinds, and other companies' success reaching customers online. But Amazon still sits well above any competition, positioning the company to enjoy more sales and potentially disrupt more areas.
2. E-commerce is still wide open
Amazon has the top spot in what continues to be a growing sector.
Global retail e-commerce sales from 2016 to 2026. Image source: Statista.
Granted, the growth rate is slowing down after exploding over the past few years. But this remains a growth sector and will continue to take on importance as a major element in any customer-focused service industry going forward. Amazon is making moves to expand its dominance. That doesn't even include Amazon Web Services (AWS) and other businesses.
3. Sales are growing despite a challenging macroeconomy
Investors made a big fuss over management's weak outlook for the 2022 fourth quarter, almost disregarding what was actually a very strong third quarter, with a 15% year-over-year sales increase. Sales have been continually strong even after the early pandemic run-up.
AMZN Revenue (TTM) data by YCharts
Of course, growth isn't linear. As a long-term investor, you shouldn't expect it to be. And although you can't time the market, you can look for advantageous entry points.
When the market frets about disappointing quarterly guidance and sends a stock price down, it might be a good time to pick up shares of a great company's stock. With the current suppressed price, now looks like an opportune time to start or add to a position in Amazon stock.
