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Amazon's share price driven upward by heavy investment in logistics operations

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Amazon Stock Pushes Forward Following Logistics Advancements
Amazon Stock Pushes Forward Following Logistics Advancements

Amazon's share price driven upward by heavy investment in logistics operations

Amazon's third quarter results, announced on September 19, show a robust performance with net sales increasing by 13% to $167.7 billion, operating income climbing 31% to $19.2 billion, and an improved operating margin of 11.4%. However, despite these positive results, Amazon's stock has shown weakness with a nearly 8% decline year-to-date.

The latest analysis suggests urgent action for Amazon shareholders regarding whether to buy or sell. The current distance from the 52-week high is over 15%, a discrepancy that investors should monitor closely.

Amazon is strategically opening its logistics to external platforms, supporting sellers on Walmart, Shopify, and Shein through its Multi-Channel Fulfillment Service (MCF). This move allows independent sellers and logistics companies that operate through multi-channel platforms to access Amazon's logistics network, enabling them to fulfill orders from various sales channels including their own websites and other retailers.

The MCF allows sellers to share FBA inventory, lower costs, and benefit from faster processes. Amazon has already integrated its logistics with eBay and Etsy, and these integrations are serving as a model for its expansion to other platforms such as Walmart, Shopify, SHEIN, eBay, Etsy, Temu, and TikTok Shop.

Amazon is expanding its logistics presence at an unprecedented pace. The company is opening a high-bay warehouse in Abu Dhabi for same-day deliveries and investing 240 million euros in India to triple its micro-fulfillment centers by 2025. These expansions are intended to significantly increase storage capacities ahead of the Great Indian Festival.

The growth engines AWS and advertising services showed strong performance, with growth of 17% and 23% respectively. Amazon's new micro-fulfillment centers in India are designed for its quick-commerce segment, Amazon Now, and are expected to contribute to the company's growth in the Indian market.

However, it is not clear if Amazon's aggressive expansion strategy will reverse the current stock trend. Shareholders should carefully consider the company's growth potential and its strategic moves before making investment decisions. The current analysis provides insights on what to do next for Amazon shareholders.

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