Why selling cars could drive the Amazon share price higher in 2025

After outperforming the S&P 500 in 2024, Stephen Wright’s looking at what could push the Amazon share price to greater highs next year.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Amazon.com (NASDAQ:AMZN) share price has comfortably outperformed the S&P 500 this year. But analysts are expecting a more subdued performance in 2025.

Created with Highcharts 11.4.3Amazon PriceZoom1M3M6MYTD1Y5Y10YALL26 Dec 201926 Dec 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

The average price target for Amazon over the next year is 5% higher than the current level – below expectations for the index. But I think the company’s latest innovation could give the stock a boost and that makes it worth considering for investors looking for stocks to buy. 

Source: TradingView

Should you invest £1,000 in Persimmon right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Persimmon made the list?

See the 6 stocks

Selling cars

There are only a few things people can’t buy on Amazon. Until recently, that included cars, but the company has recently expanded into allowing people to buy vehicles through its platform.

So far, the only manufacturer on the platform is Hyundai, but more companies are expected to join in 2025. And there are potential benefits for both sides. Listing through Amazon might help sellers access a bigger customer base. And for the marketplace, it could generate revenues with very little by way of associated costs.

So far, so good. But selling cars online has been tried before and the dealership model has proven hard to disrupt. So is there any reason to think it’s going to succeed this time?

Scale

Success isn’t guaranteed, but it doesn’t cost Amazon much to try the idea out and it does have a good start in terms of what could potentially be the biggest obstacle. The challenge is scale.

The operation needs both buyers and sellers, but attracting one without the other’s hard. Vendors are unlikely to list in places people don’t look and buyers won’t search in places that don’t have many cars. 

Amazon though, has an advantage here. Its marketplace already attracts a significant number of users and it might be able to use this to help it convince manufacturers to list on its platform.

If it can do this, having more buyers should bring more sellers and the cycle continues. So as an Amazon shareholder, I think there are reason to believe this is at least worth exploring.

Risks

It might turn out that even the mighty Amazon can’t disrupt the existing way of buying and selling cars. But even if it fails, I’m not expecting a significant hit in terms of returns.

In terms of investment risks, I’m much more focused on the possibility of the company attracting antitrust attention. This has been an issue for Alphabet this year and I think the risk is real. 

Amazon works so well because the various bits of its network support each other. The marketplace attracts users to other services, which are the main profit engines for the business.

Either one without the other would be a much weaker – and a much less attractive investment. So this is where I think the real threat to Amazon is over the coming year.

Worth a look?

I think the move into selling cars is something of a shot to nothing. I don’t anticipate a significant problem if it fails and if it succeeds it could be a very nice addition. 

In my view, the company’s in a better position than anyone else to make selling cars online work. And I think it could boost the Amazon share price in 2025.

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Amazon. The Motley Fool UK has recommended Alphabet and Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »