What can I trade instead of Amazon stock?

Amazon is one of the most traded stocks on the market, and for a lot of good reasons. But given the price of its shares, AMZN is rapidly becoming inaccessible to a lot of investors. Take a look at some of the most popular competitors to Amazon and whether they’re really a good alternative.

Amazon

4 alternatives to Amazon

Amazon shares are consistently among the most highly-traded and most-coveted stocks on the market. The impressive growth of both the company’s offering and share price has meant its returns are nearly untouchable. Over a 24-year period, AMZN shares have seen a return of 170,600%, compared to the average returns of 600% for S&P 500 companies.

While no one can deny Amazon shares are a notch in any investor’s belt, the price tag means they’re pretty inaccessible to many. That’s why a lot of investors have tried to find alternatives to the internet behemoth, without the quite-so-high cost – although, any stock that’s being presented as an alternative to Amazon is unlikely to come cheap.

Learn more about Amazon's stock price performance

Now, finding an exact replica of Amazon is nearly impossible but there are competitors that pose interesting alternatives and even some newbies on the block claiming to be ‘the next Amazon’.

Remember, past results are no guarantee of future performance. 

You can trade Amazon or any of the shares mentioned throughout this article with City Index. Using CFDs you can go both long and short on the share prices, creating the opportunity to benefit from stable growth and short-term volatility. 

To get started, just:

  1. Open a City Index account, or log in if you’re already a customer
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Not ready to trade live markets? Open a demo account to practise trading in a risk-free environment with virtual funds.

Alibaba

Amazon and Alibaba both operate in the retail sphere and are regularly compared as e-commerce giants. While Amazon holds dominance in the American market, Alibaba has the market share in China.

Learn more about Alibaba and its business model

While Amazon sells directly to consumers, Alibaba operates a business-to-business marketplace in which Alibaba is the middleman between buyers and sellers, charging sellers a fee to rank higher on the site.

FY 2020

Gross revenue

Net income

Earnings per share

Price-to-earnings ratio

Amazon.com

$386.06 billion

$21.33 billion

$41.83

83.15

Alibaba Group

$109.48 billion

$22.98 billion

$7.21

23.62

Amazon’s shares trade at over $3,470 while Alibaba shares are worth approximately $170, but what exactly does each price tag get you? Alibaba currently has lower revenues than Amazon, but a higher net income. Comparing the price-to-earnings ratios of Amazon (83.15) and Alibaba (23.62) shows us that BABA is the more affordable and is trading closest to its intrinsic value.

Looking at analyst recommendations1, Amazon has a consensus price target of $4,173.2683 suggesting a potential upside of 19.99%, while Alibaba Group has a consensus price target of $303.6296, suggesting a potential upside of 78.29%.

Go long or short on Alibaba with City Index. Open an account to start trading or practise trading in a demo account.

Etsy

Online crafts marketplace Etsy is significantly smaller than Amazon but deserves consideration for not just surviving, but growing while the e-commerce behemoth took over the internet. Despite Amazon’s attempts to compete with the launch of Amazon Handmade, Etsy has remained the consumer favourite.

Its unique position has meant it benefits both as an e-commerce firm and dominant player in the personalised inventory marketplace.

Etsy’s business strategy is markedly different from Amazon’s, in that it doesn’t compete against the sellers on its platform. Amazon has its own brands, so any sellers on the platform are being pitted against the giant. But Etsy generates all its money through market fees (listings, transactions and payments) and services (shipping labels and advertisements). This means Etsy’s business model is built around ensuring its sellers are as profitable as possible too. 

FY 2020

Gross revenue

Net income

Earnings per share

Price-to-earnings ratio

Amazon.com

$386.06 billion

$21.33 billion

$41.83

83.15

Etsy

$1.7 billion

$349.25 million

$1.08

63.69

While their revenues are nowhere near comparable, Etsy’s growth over 2020 is worth noting. The move to digital commerce over the pandemic led to active buyers on the platform increasing by 77% to a record 81.9 million. It was the fourth most-visited marketplace in the US in 2020, and management expects that its growth will only continue over the coming years.

Shares of Etsy currently trade at just over $216, a 95% increase over the last year – compared to Amazon’s rise of 11%. However, the median price target1 for Etsy is $217.50, giving it a potential upside of just 0.4% compared to Amazon’s 19.99%

Go long or short on Etsy with City Index. Open an account to start trading or practise trading in a demo account.

Square

Square is a provider of credit card payment processing solutions, helping sellers start, run, and grow their businesses online.

Amazon launched its own payment systems in 2014 – a system that near replicated Square’s offering but with the consumer base and brand power that Square couldn’t hope to achieve at the time. However, the product didn’t attract enough attention and failed a year later.

This is likely the driving force behind Amazon’s decision to buy Affirm, a buy-now-pay-later firm, which would secure the giant a position in the online payments space. The news came shortly after it was announced that Square would be acquiring Afterpay, a direct rival of Affirm.

Despite all this, Square has maintained impressive growth. While Amazon has diversified from a pure marketplace, Square has stayed firmly rooted in fintech. Instead of diversifying in terms of which markets it has offerings in, Square has focused on ensuring dominance in both personal and business finance.

FY 2020

Gross revenue

Net income

Earnings per share

Price-to-earnings ratio

Amazon.com

$386.06 billion

$21.33 billion

$41.83

83.15

Square

$9.5 billion

$213 million

$0.44

13291.5

Shares of Square are up by about 22% year-to-date. The company announced last month that it would acquire Afterpay, an Australian buy now, pay later (BNPL) company in a $29 billion, all-stock transaction.

Consensus price targets1 for Square are $268.49, a 1% upside from its current share price. At the high price target, we can see estimates in for $380, which would present a 43% increase. There have been concerns that Square stock is overvalued, but if we’re using Amazon as a comparison, it’s clear this isn’t always an issue when it comes to exciting tech.

Go long or short on Square with City Index. Open an account to start trading or practise trading in a demo account.

Chegg

Chegg has followed in Amazon’s footsteps quite literally. It started selling books – albeit college textbooks – and then has expanded its offering into an online platform for college students. The introduction of stay-at-home schooling over the pandemic led to a revenue increase of 57% year-over-year.

FY 2020

Gross revenue

Net income

Earnings per share

Price-to-earnings ratio

Amazon.com

$386.06 billion

$21.33 billion

$41.83

83.15

Chegg

$0.64 billion

-$6.2 billion

$0.37

107.71

While the switch back to campus learning has caused CHEGG stock to decline this year, it was never realistic to expect students to remain in online learning full-time. Chegg’s growth – while boosted by the pandemic – was steady anyway. From 2016 to 2020, Chegg’s EBITDA grew at an annual rate of 78%.

Chegg’s growth is helped by the addition of new services and subjects to its course library at an impressive rate. In February of 2020, Chegg Study had 35 million pieces of content and it now has nearly double that. Despite the increase in content, Chegg hasn’t raised its user fees, which means consumers are kept happy.

In terms of the company’s share price, it’s gained 643% over the past five years. Despite the short term fears over a decline in users, the consensus price targets1 are sitting at $103.24, representing a 26.11% upside, compared to Amazon’s 19.99%.

Start trading top stocks with City Index by:

  1. Opening an account, or logging in
  2. Searching for the company you want to trade in our award-winning platform
  3. Choosing your position and size, and your stop and limit levels
  4. Placing the trade

Or remember, you can practise trading in a demo first.

Please note, past results are no guarantee of future performance. 

1MarketBeat, 2021


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