How to Buy Amazon Shares in the UK

Investing in the digital age has a wealth of advantages. It’s much simpler and faster to buy shares using one of the market’s many online stockbrokers. It’s also easier to source information that can help all of us make the right investing decision.

A lot of new investors don’t often realise this, but share pickers in the UK can buy companies from all over the globe as well as from the London Stock Exchange. Buying US stocks is especially becoming increasingly popular with British investors.

And why not? Broadly speaking, it’s as quick and straightforward as buying UK shares. And investors have a truly enormous range of stocks to buy across the Dow Jones, Nasdaq, and S&P 500 indexes, too.

Can you buy Amazon shares in the UK?

Yes, it’s possible to buy Amazon (NASDAQ:AMZN) shares in the UK. In fact, the Nasdaq-listed business is one of the most frequently traded companies from North America.

According to share dealing service interactive investor, Amazon is the second-most traded US stock on its platform.¹ The online giant is sandwiched between electric car manufacturer Tesla and tech colossus Apple.

How to buy Amazon shares in the UK

The process of buying Amazon stock is largely the same as if one wishes to buy companies on the London stock market. Investors need to go through the following steps to start buying US shares:

1.   Find a broker

Most brokerages based in Britain will allow individuals to buy US stocks. Once an investor has confirmed that this is the case, the business of choosing which brokerage to use depends on a variety of factors.

Some brokers offer lower fees, while others offer superior customer service. Certain platforms can be easier to use than those of rival brokerages, or offer extra benefits like analyst research.

2.   Set up an account

Once you’ve selected a brokerage, the next step is to open a trading account. To do this you’ll need to provide some basic information, such as your:

• Name
• Address
• Employment status
• National Insurance number
• Debit card information

3.   Complete a W-8BEN form

The process of buying US stocks is basically the same as buying UK shares. However, any foreign investor who wishes to buy, hold, or sell US shares has to complete what is known as a W-8BEN form.

This document is required by the Internal Revenue Service (IRS) to confirm that a person isn’t resident in the US. Those with a valid W-8BEN aren’t required to pay 30% tax on income they make from their shareholdings.²

The W-8BEN can be provided by share dealing services and filed on an investor’s behalf.

4.   Decide how much to invest

Before you’re ready to start buying shares, you’ll first have to decide how much money you wish to invest. There is no set rule of course — it varies according to your own financial circumstances and your investment goals.

The number one rule than any investor needs to remember, however, is never to invest any more than you can afford to lose!

Stock markets tend to go up over the long term. But they can also go down. Companies can also hit choppy waters and eventually become worthless. So, someone who buys Amazon stock (or indeed any share) needs to accept they may lose some or all of their capital.

5.   Research Amazon stock

Living in the information age provides a huge advantage to diligent investors. There’s a wealth of data and research out there on the internet to help us decide which shares to buy (and which to avoid).

Investors looking to buy Amazon stock have an extra advantage. Large and mega-cap companies like this (Amazon’s market cap currently sits at a colossal $932.7bn³) tend to attract extra attention from brokers and equity analysts.

Furthermore, Amazon is also a so-called bellwether stock. Being one of the world’s largest retailers means its trading performance can be used to gauge the health of the broader economy. This role also boosts the amount of information and analysis available to potential investors, from reporters in the national press to industry commentators and economists.

You’ll want to closely research price information and price graphs, trading volumes, key data like price-to-earnings (P/E) ratios, and regulatory filings made to the Securities and Exchange Commission (SEC) like annual trading statements.

And of course, Amazon’s own corporate website is an essential source for potential investors. The retail giant’s Investor Relations page alone displays SEC filings, press releases, annual reports, and corporate governance information.

6.   Bring Amazon up and hit ‘Buy’

So you’ve set up your brokerage account, done your research and decided to buy Amazon stock. The next step is to punch ‘AMZN’ (the company’s stock ticker) into your broker’s share dealing platform to bring up the share’s trading page.

From there you can check buying and selling prices (know as the bid and offer prices), choose how many shares you wish to purchase, and then hit the ‘Buy’ button. The platform will then give you all the information you need (including trading fees) and ask you to confirm the transaction.

The whole process can take less than 30 seconds to execute.

Where to buy Amazon shares in the UK

There are dozens of brokerages out there for UK share investors to choose from. The Motley Fool’s list of top-rated brokers in the UK provides a taster of some of the share trading platforms currently out there.

Is it worth it to buy one share of Amazon?

The amount each investor could or should invest in stocks depends on their financial circumstances, their tolerance of risk and other individual factors.

However, buying small numbers of shares may not be a cost-effective strategy. By the time one has paid transaction costs and stamp duty, there’s little actual capital left with which to buy a certain stock.

But at current prices — looking solely from a cost perspective in November 2022 — that it looks worthwhile buying even a single share in Amazon.

As of November 2022, Amazon trades at $92.25 per share (or £77.45 at constant exchange rates). To buy this through IG Group’sonline share trading platform, for example, you’d have to pay £87.84 in total. That would be £77.45 for that Amazon share and £10.39 in costs (reflecting a £10 flat transaction fee and a 0.5% foreign exchange fee of 39p).⁴

In other words, more than 88% of the money you spent would be invested in Amazon stock. And right now, making trades using one of IG Group’s retail investor accounts attracts some of the highest transaction charges out there.

Investors using other share dealing providers are likely to get even better value for money. Halifax, for instance, doesn’t charge UK investors commission for trading US shares.

Should UK investors buy shares in Amazon?

The question to consider next, however, is whether it’s a good idea to buy Amazon shares in the UK today.

Buying retail shares is risky business during periods of economic slowdown. The dangers are particularly elevated now, too, given the extreme inflationary pressures hitting shopper spending power.

Amazon’s disappointing trading numbers for the third quarter of 2022 highlighted this tough trading environment. Net sales rose 15% in the period to $127.1bn, missing forecasts (though the impact of a strong US dollar on its international markets hampered growth at the group level).⁵

This revenue miss, allied with a near-18% jump in costs (to $124.6bn) caused the company’s profits to also trail estimates. Amazon’s pre-tax profit slumped to $2.9bn from $4.3bn a year earlier.

Having said all of that, there are reasons why Amazon stock could prove an attractive buy for long-term investors.

In 2022, Amazon generated the lion’s share of revenues from its retail operations in North America and elsewhere. But the rapid growth of its Amazon Web Service (AWS), Prime video, and delivery subscription divisions could help light a fire under long-term profits growth.

Buying Amazon shares could deliver huge investment returns in our increasingly digitalised world. But the firm’s high valuation is at odds with the problems it currently faces. A UK investor must weigh these pros and cons and determine for themselves if Amazon is the right investment for them.