How to Buy Amazon Shares UK for Beginners in 2023

AMZN shares could be a great option if you’re based in the UK and want exposure to the US stock market. While some UK brokers charge premiums to access international shares, others offer a commission-free service.

In this guide, we explain how to buy Amazon shares in the UK with low fees. We also discuss the share price potential of Amazon, allowing you to make an informed investment decision.

Where to Buy Amazon Stock in the UK

You’ll need to find a suitable online broker when exploring how to buy Amazon shares in the UK. Not only should your chosen broker offer access to the NASDAQ at competitive fees, but it should be regulated by the FCA.

Below, we reveal the best stock brokers in the UK for buying Amazon shares.

1. eToro – Overall Best Place to Buy Amazon Shares in the UK

We found that eToro is the stand-out option when buying Amazon shares in the UK. Not only in terms of low fees and safety, but convenience and user-friendliness. First and foremost, it takes just minutes to open an eToro account. UK investors can easily deposit funds, as eToro supports debit/credit cards and e-wallets. UK bank transfers are also supported. There is a small minimum deposit requirement of $10 – which is about £8.

There should be no concerns with safety, as eToro is heavily regulated. It’s authorized and licensed by the FCA, as well as FINRA (US), ASIC (Australia), and CySEC (Cyprus). Most importantly, eToro is covered by the FSCS. In the unlikely event eToro goes bust; the FSCS covers investments up to £85,000. When it comes to fees, eToro offers one of the cheapest ways to buy Amazon shares in the UK.

For example, it doesn’t charge a premium to invest in international shares like Amazon. On the contrary, you can buy Amazon shares without paying any commissions. This is also the case with thousands of other US-listed shares, such as Apple, Tesla, Nike, and Disney. You can also buy UK-listed shares commission-free and eToro even waivers stamp duty tax. This will save you a further 0.5%.

Another benefit of buying Amazon shares on eToro is that you can invest small amounts. It supports ‘fractional’ ownership from just $10 per trade. So, although Amazon trades at $138 per share right now, you only need to invest about £8. What’s more, eToro also supports other asset classes – allowing you to build a diversified portfolio. For example, you can in index fund ETFs that track the FTSE 100, Dow Jones, NASDAQ 100, and more. You can also trade currencies and commodities.

eToro is also considered one of the best Bitcoin brokers in the UK. Not only can you buy Bitcoin, but dozens of other cryptocurrencies. This includes Dogecoin, Ripple, Ethereum, and Cardano. Another top-rated feature offered by eToro is copy trading. If you’re new to this concept, copy trading allows you to ‘copy’ an experienced investor. You’ll have thousands of investors to choose from and the minimum capital requirement is just $200, or about £160.

If you favor top-notch customer service, eToro also stands out. You can contact eToro via live chat 24/5. Moreover, eToro also offers a UK stock trading app for iOS and Android smartphones. This enables you to buy and sell Amazon shares on the go – not to mention keep tabs on your investments. Finally, eToro is very user-friendly. You can easily register, deposit funds, and trade shares without any prior investment experience.

74% of retail investor accounts lose money when trading CFDs with this provider.

2. XTB – Trade Amazon Shares With Leverage of 1:5  

Second on our list of for the top places to buy the best shares in the UK, XTB is an FCA-regulated broker that specializes in contracts-for-differences (CFDs). This means that you’ll be able to trade Amazon shares without owning them. CFDs track the value of Amazon shares in real-time and offer a range of perks. For example, you can trade Amazon shares with leverage of up to 1:5. So, if you risk £500 on an Amazon buy order, you can enter a position worth £2,500.

Additionally, XTB also supports short-selling. If at any point you believe Amazon shares are overvalued, XTB makes it easy to profit from a potential stock price decline – you simply need to place a sell order. XTB is also one of the most cost-effective places to trade Amazon shares. It doesn’t charge any trading commissions and spreads are very competitive.

For instance, the spread on Amazon shares is just $0.43. This means that you’ll pay just $0.43 for every Amazon share that you trade. XTB also supports more than 2,000 other shares. This includes other popular US companies like Tesla, Apple, Microsoft, and Meta Platforms. You can also trade shares listed in the UK and the European markets.

XTB also supports commodities like gold and oil, not to mention forex and indices. However, as a UK investor, you won’t have access to cryptocurrencies. There is no minimum deposit requirement at XTB and the broker accepts UK debit/credit cards and bank transfers. A selection of e-wallets are also supported. If you’re new to CFDs, consider opening an XTB demo account. It’s completely free and allows you to trade shares with virtual funds.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider.

3. AvaTrade – Top Rated Broker With Low Stock Spreads and Fast Account Opening

AvaTrade is registered and licensed in many regions throughout the globe, with its headquarters located in Dublin, Ireland. At the time of this writing, it has an impressive 4.7 star rating on TrustPilot, out of over 8,000 reviews. This is quite rare and is testimony to the standard of customer care and the fluidity at which the platform operates.

AvaTrade is perfect for beginner stock traders as it is very easy to set up your account and start trading shares such as Amazon (available as a CFD). Most clients report a positive relationship with their personal account manager – many providers have a personal account manager that is difficult to get hold of, or does not do an adequate job. This is actually where a large proportion of the positive online reviews come from.  

Everything about AvaTrade is streamlined and easy to use. It has a simple interface for easy and direct trading. There are no withdrawal fees, though there is a £100 minimum deposit. Fees for CFDs are low, though inactivity fees are £50 per quarter with an additional £100 per year (£300 for 12 months of inactivity – you need to be active with AvaTrade). Leverage is up to 1:30. 

It’s clear where AvaTrade shines and where it is lacking. It’s perfect for novice and intermediate stock and ETF traders, as it is a low fee provider with quick setup times and an excellent reputation for customer service. The platform also offers copy and social trading Through AvaSocial, ZuluTrade, MQL5 Signal, and DupliTrade.  

It’s not really suited to Forex traders so much as it has higher fees and does not offer a wide range of functional trading features in comparison to other providers. It’s a simple platform with features that are ideal for new investors. It has a low number of offerings (250+), but this might be beneficial to those interested in focusing their attention without getting distracted. 

What are the downsides of AvaTrade? It’s not regulated by the FCA and it only offers CFDs on stocks, without any direct share ownership. It also has high inactivity fees, high FX fees, and a relatively large minimum deposit of £100. But there are no commission fees with AvaTrade. 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider.

4. Trade Nation – Commission-Free Trading Accounts With Spreads of $0.02 per Share          

Trade Nation is a user-friendly CFD broker with its own proprietary platform – TN Trader. We found that Trade Nation offers highly competitive fees – especially when trading Amazon shares from the UK. For example, there are no trading commissions to pay, irrespective of the share market. Moreover, Trade Nation offers spreads of $0.02 per slide when trading Amazon shares.

For example, suppose you decide to trade two Amazon shares – you’ll simply pay $0.04 to enter the market. And when closing your position, you’ll again pay just $0.04. Unlike other CFD brokers, spreads on Trade Nation are fixed. This means that you’ll always know exactly what you’re paying. If you decide to trade shares from other markets, the spread model is slightly different.

For example, UK shares can be traded with spreads of 0.1%. This means you’ll pay just £1 for every £1,000 traded. European shares are less competitive, as spreads amount to 0.2%. In addition to shares, Trade Nation supports plenty of other markets. This includes dozens of forex pairs, commodities, and indices.

When it comes to safety, Trade Nation is regulated by multiple licensing bodies. Not only in the UK but Australia, South Africa, and the Bahamas. Client-owned funds are held in segregated bank accounts. To deposit funds into a Trade Nation account, you can use a debit/credit card, bank transfer, or Bitcoin. You can also start off with the Trade Nation demo account, which is free to use.

Financial Spread Bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.3% of retail investor accounts lose money when trading CFDs with this provider.

Why Invest in Amazon?

Amazon is one of the largest companies globally; it’s also provided investors with significant gains since it went public in 1997. However, this doesn’t necessarily mean that Amazon is a suitable investment for your portfolio.

In this section, we explore the Amazon investment thesis. Read on to determine whether buying shares in Amazon is right for you.

Note: Amazon shares trade in the US, so its share price is quoted in US dollars. As such, for the remainder of this guide, we discuss Amazon’s share price history and potential in US dollars.

Amazon has Generated Significant Returns Since it Went Public

Those holding Amazon shares long-term have witnessed significant returns. For instance, when Amazon went public in May 1997, its shares were priced at just $0.09 (adjusted for multiple stock splits – more on this later).

So, in 1997, it would have cost you just $900 to buy 10,000 Amazon shares. Although Amazon has gone through a lot of volatility over the prior decades, it’s now worth over $138 per share. This means that since it went public, Amazon has increased in value by over 153,000%.

Therefore, if you invested £5,000 into Amazon shares in 1997, your money would now be worth over £7.6 million.

In comparison, the FTSE 100 has offered mediocre returns. This is the UK’s primary index benchmark and it contains the 100 largest companies on the London Stock Exchange. Since launching in 1984, the FTSE 100 has increased by just 580%. This is just a minute fraction of Amazon’s 153,000% gains.

Amazon is Trading at an All-Time High Discount of 25%

If you’re looking to invest in Amazon in the UK today, you’ll be entering the market at a favorable entry price. This is because Amazon shares are currently trading at a discount when compared to their prior all-time highs.

For example, Amazon shares are currently trading at $138. However, Amazon shares were worth $186 at their peak in November 2021. This means that you can currently buy Amazon shares in the UK at a 25% discount.

If Amazon shares recover their all-time high price of $186, you’ll be looking at an upside of 34%. That said, Amazon’s long-term value could be significantly higher – as we explain throughout this guide.

Q2 2023 Earnings Report Exceeded Wall Street Expectations 

When assessing the potential of an Amazon stock investment, you should evaluate the firm’s quarterly earnings report. This is a legal requirement for all publicly listed companies and it outlines Amazon’s performance over a three-month period. In other words, quarterly earnings reports give you a 360-degree overview of how Amazon is performing.

Amazon’s most recent earnings report covered Q2 2023. Put simply, during the quarter, Amazon exceeded Wall Street expectations in most departments.

For example:

• Amazon reported quarterly revenues of $134.38 billion. This represents a year-over-year increase of 10.85%. Wall Street analysts had predicted revenues of $131.5 billion
• What’s more, net income stood at $6.75 billion, up 432.84% year-over-year. That said, Amazon’s net income figures are somewhat skewed, considering it made a $2 billion loss in Q2 2022. Nonetheless, this still represents a sizable jump from Q1 2023, which saw a net income of $3.17 billion.

In addition, Amazon reported earnings per share of $0.65; Wall Street analysts predicted $0.35. Ultimately, Amazon’s strong quarterly earnings show that the company is well-primed for solid growth in the coming years.

Robust Balance Sheet Will Fuel Innovation and Acquisitions  

Amazon has one of the strongest balance sheets globally. This ensures that Amazon can weather any economic storm. For example, it currently holds over $63.97 billion in cash and short-term investments. This is marginally down from the previous quarter, which stood at $64.4 billion. But it’s 5.37% more than Amazon held in 12 months ago.

Additionally, its strong financial position will enable Amazon to do what it does best; innovate. Its research and development division is industry-leading, covering everything from artificial intelligence and machine learning to drone deliveries and autonomous supply chain management. Amazon can also use its robust cash flow position to increase its acquisition strategy.

After all, Amazon owns dozens of subsidiaries. Some of its most recent acquisitions include Metro-Goldwyn-Mayer ($8.5 billion), Whole Foods ($13.7 billion), and Zoox ($1.2 billion). This strategy enables Amazon to diversify into lots of different markets – rather than relying solely on its e-commerce division.

Amazon has a Well-Diversified Business Model   

Amazon has a highly diversified business model that covers a wide range of products, services, and target markets.

Let’s break down some of its core divisions:

E-commerce

Amazon’s e-commerce division sits at the heart of the company. This can be broken down into two core segments.

First, it allows third-party merchants to sell their products on the Amazon marketplace. This is a risk-averse strategy, as Amazon isn’t required to directly purchase or hold stock. Moreover, sellers will distribute products directly to the customer – Amazon simply takes a commission.

That said, third-party merchants can also sign up for the Fulfilled by Amazon service. This means merchants send their products to an Amazon warehouse. Amazon will then ship the products once they are purchased from a customer.

Second, Amazon also has its own products and services that can purchased on its website. This enables Amazon to target much higher profit margins, as it sells directly to consumers. Either way, Amazon sells every product type imaginable – from clothes, TVs, and books to gaming consoles, smartphones, and merchandise.

Amazon Prime

Amazon Prime is also an important division of the company. As reported by the Guardian, more than 200 million people are signed up for Amazon Prime – which offers consumers a range of benefits.

This includes priority shipping; US consumers will often receive their products on a same or next-day basis. Moreover, Prime subscribers have access to Amazon’s video and music streaming service.

Amazon Web Services

Cloud computing is a huge growth market; Amazon Web Services (AWS) is the market leader in this space. For example, as of Q2 2023, AWS has a 32% market share. Microsoft Azure and Google Cloud have 22% and 11%, respectively.

Although AWS saw a slight dip in Q2 (down from 34%), it’s still a huge revenue driver for Amazon. After all, it contributed $22.1 billion during the quarter.

Groceries 

Amazon recently entered the grocery niche – allowing US consumers to order their food and beverage requirements online. It offers super-fast deliveries to Prime members at competitive pricing. It already has an established distribution system, not to mention a fully-fledged supplier network after its Whole Foods acquisition.

Currently, Amazon’s grocery division represents just a 2% market share – just a fraction of Walmart’s 18%. However, this is still a new market for Amazon, so it’s expected to grow significantly in the coming years.

Amazon Pharmacy 

Another high-growth market in Amazon’s portfolio is pharmaceuticals. Put simply, it now runs a full-service online pharmacy, offering affordable drug prices and speedy deliveries.

Like many of its divisions, additional perks are available to Prime members. For example, Prime members receive free 2-day shipping, while standard members need to wait 4-5 days. Moreover, Amazon Pharmacy accepts most US insurance plans, a key factor for many when choosing a provider.

Amazon’s Advertising Division Remains Untapped  

Advertising could be one of Amazon’s biggest revenue drivers in the coming years. Currently, it’s also one of Amazon’s fastest-growing markets. For example, as per Q2 2023 filings, advertising contributed more than $10.6 billion in revenue, up 22% year-over-year. But this barely scratches the surface.

After all, Amazon is home to hundreds of millions of customers – whether that’s through e-commerce, video streaming, or cloud computing services. Crucially, Amazon has access to an unprecedented amount of data, allowing it to offer highly targeted ad campaigns. Amazon also uses machine learning and artificial intelligence to streamline the data collection process – and suggest products and services that appeal specifically to each user.

According to Andy Friedland at Swiftly, a technology platform offering turn-key solutions to retailers, Amazon’s advertising division could grow to $100 billion annually.

Amazon is Outperforming the Broader Market in 2023  

In addition to strong fundamentals, Amazon’s share price continues to outperform the broader market. Year-to-date, Amazon shares are up over 60%. In contrast, the NASDAQ 100 is up 42%.

And when making comparisons to the FTSE 100, Amazon shares become even more attractive for UK investors. After all, year-to-date, the FTSE 100 is down just over 1%.

Continued Improvements to Amazon’s Distribution Network  

One of the most important drivers for Amazon’s e-commerce business is speed. Consumers want to conveniently order products online and receive their items quickly. While Amazon is already known for its efficient delivery processes, improvements continue to be made.

For example, Amazon recently invested significant resources into its US delivery network. Put simply, the firm has transitioned from a national supply chain to a regional one. As orders are now fulfilled regionally, this means faster delivery times and reduced operational costs. In fact, Amazon has slashed its delivery miles by 19% – offering huge savings to its bottom line.

Amazon’s regional network also allows for increased same-day deliveries. And, as it increases automation within its fulfillment centers, it often takes just minutes for orders to be packed for delivery. This level of efficiency cannot be rivaled by Amazon’s competitors, especially in the US market.

Amazon Share Price History – How Much is Amazon Stock Worth?

In this section, we’ll take a much closer look at the Amazon stock price history. This will enable you to gauge what sort of returns Amazon could produce in the future.

Amazon became a publicly traded company in May 1997 – less than three years after the company was founded by Jeff Bezos. Its IPO set an initial price of $18 per share. Amazon issued 3 million shares, meaning it raised just $54 million from investors. However, Amazon has initiated four stock splits since its IPO. As such, Amazon’s IPO price should be adjusted to $0.09.

After going public, Amazon shares witnessed a major price increase. This was because internet stocks were a hit commodity during the late 1990s. This period was known as the ‘Dot.com Bubble’. However, Amazon, like most internet stocks, capitulated when the bubble burst. In fact, CNBC explains that at one point, Amazon shares were down 90% from their prior highs. Crucially, it took Amazon more than a decade to recover from the Dot.com bubble.

Nonetheless, those who bought Amazon shares in the 2000s are now looking at significant growth. After all, Amazon hit an all-time high of $186 in November 2021. Compare this to its IPO price of $0.09, and that’s gains of over 153,000%. Put otherwise, if you invested just £100 into Amazon shares in 1997, your portfolio would have been worth £153,000 at its peak.

In terms of more recent price performance, Amazon shares were priced at $97 five years ago. Today, they’re trading at $138. This represents five-year gains of 41%. In contrast, the NASDAQ 100 – which tracks the 100 largest companies on the NASDAQ exchange, grew by 108%. This shows that over the prior five years, Amazon has underperformed the broader market.

However, year-to-date, Amazon continues to outpace the NASDAQ. For instance, while the NASDAQ 100 has grown by 42% this year, Amazon shares are up 60%. It’s important to note that while Amazon is a large-cap company, its shares are often volatile. For example, Amazon shares have 52-week lows of $81.43. That’s about 40% below the current Amazon stock price.

Amazon Stock Forecast

You might be wondering what the future holds for Amazon’s share price. While predicting future stock prices is challenging, one of the best resources is ‘sell-side analyst ratings’.

Put simply, sell-side ratings are given by investment bank analysts. They give a quarterly forecast, meaning they predict what Amazon shares will be worth in three months’ time. Analysts will also give Amazon shares a rating, such as ‘Strong Sell’, ‘Hold’, or ‘Strong Buy’. This can help you gauge whether Amazon shares are currently undervalued or overvalued, based on expert insights.

According to 53 sell-side analyst ratings over the prior three months, Amazon is rated as follows:

• Strong Buy: 37
• Buy: 12
• Hold: 4
• Sell: 0
• Strong Sell: 0

These figures show that Wall Street overwhelmingly views Amazon as a solid investment. After all, 49 out of 53 sell-side analysts rate Amazon a ‘Strong Buy’ or a ‘Buy’. What’s more, not a single analyst has Amazon as a sell.

Sell-side price targets for the next 12 months are even more interesting. There is a high price target of $230 – which is 66% above the current share value. The low target is $140, which is just 1.4% above current prices. The average price target for sell-side analysts is $175.63. This would represent a 12-month growth of 27% from Amazon’s current share price.

It’s also worth exploring Amazon stock chart predictions from reputable Wall Street analysts.

• Sachin Mittal – an analyst at investment bank DBS, recently upgraded his Amazon price target to $175. Mittal believes that the retail and cloud computing segments will play a major role in Amazon’s growth trajectory.
• Bruce Kamich – a technical analyst at the Street, believes weekly indicators suggest a $178 price target for Amazon. Kamich is basing his analysis on on-balance volumes and the MACD indicator.
• Arun Sundaram at CFRA Research has a slightly more conservative outlook on Amazon. Sundaram has set an Amazon price target of $154, rating the stock a ‘Buy’.

Amazon Stock Fundamentals

The ‘fundamentals’ are hugely important when assessing the price potential of Amazon shares. Put simply, the fundamentals refer to Amazon’s financial health and recent company performance. In other words, it gives us a snapshot of where Amazon is right now, which we can then compare to previous quarters.

Let’s take a closer look at Amazon’s fundamentals to assess its investability.

Amazon EPS

The earnings-per-share (EPS) is widely used by investors when assessing the viability of a company. The EPS looks at two key metrics.

• The amount of net profit Amazon has made over the prior year.
• The number of common shares in circulation

You’ll divide the net profit by the number of shares to get the EPS. Once you know the EPS, you can make some comparisons to assess whether the trend is positive or negative.

As per Amazon’s most recent quarterly earnings report, it has an EPS of $0.65. Crucially, this represents an 89.54% surprise, as analysts expected just $0.34. In Q1 2023, Amazon also surpassed analyst expectations. While an EPS of $0.22 was expected, Amazon reported a 44.07% surprise of $0.31.

This highlights that Amazon continues to outperform Wall Street expectations – a solid indicator that can lead to increased share prices.

Amazon P/E Ratio

The price-to-earnings ratio (P/E) is also one of the most important fundamentals when assessing a stock investment. This metric looks at the EPS in relation to Amazon’s current stock price. The P/E ratio helps investors determine whether Amazon is potentially under or overvalued.

Currently, Amazon has a P/E ratio of 109.82 times. On its own, the P/E ratio offers little value. As such, we need to compare the P/E ratio with the broader markets. A good starting point is to look at other tech giants listed on the NASDAQ.

Alphabet, for example, currently has a P/E ratio of 29.7 times. This is significantly lower than Amazon. At 31.84 times, Apple also has a more attractive P/E ratio. This is also the case with Microsoft, which currently has a P/E ratio of 33.94 times.

So why is Amazon’s P/E ratio so high? Amazon has historically had a much higher P/E ratio than the industry average. This is largely because much of Amazon’s value is built into future expectations. In other words, Amazon is valued based on revenues Wall Street anticipates will be generated in the future. And in turn, this leads to a high P/E ratio.

Amazon ROE

The return on equity (ROE) is another useful metric to assess Amazon’s performance. This looks at how much money Amazon is generating based on shareholder capital. In other words, how effective Amazon is in using the money invested by shareholders. This can be calculated by dividing the trailing 12-month net income into total shareholder equity.

• In Q2 2023, Amazon had a ROE of 8.62%.
• In the previous quarter, the ROE was 3.02%.
• In Q4 2022, Amazon reported a negative ROE of 1.98%. This was because Amazon reported a huge decline in net income during the quarter.
• That said, in Q3 and Q2 2022, the ROE was 8.37% and 8.96%, respectively.

If the ROE is above the industry average, this is a good sign. It highlights that Amazon is effective in allocating shareholder capital.

Short Interest Ratio

The Short Interest Ratio (SIR) (also called ‘days to cover’) allows investors to assess bearish sentiment on a stock. In other words, how many investors are short-selling a company because they believe its share price will decline.

The SIR looks at two key metrics:

• The number of Amazon shares currently being short-sold
• Amazon’s average daily trading volume.
• You would then need to divide the total shorted shares into the average daily volume.

Once you have the SIR, this highlights how many days it would take to ‘cover’ the number of shorted stocks. At just 1.197, it goes without saying that Amazon has one of the lowest SIRs in the market. As we mentioned earlier, out of 53 sell-side analysts, nobody is currently rating Amazon a sell. On the contrary, sell-side analysts are overwhelmingly bullish on Amazon shares.

P/S Ratio

The price-to-sales (P/S) ratio also yields some useful fundamental data. It looks at how much revenue Amazon is generating in relation to its current share price.

The table below offers a snapshot of Amazon’s P/S ratio over the prior four quarters.

Generally,  if a company has a low P/S ratio, it could mean that its shares are undervalued. However, there are many other metrics to consider. For example, the P/S average in the respective industry.

Recent figures suggest that Google has a P/S ratio of 5.72. While Apple has an even higher P/S ratio of 7.88. This shows that Amazon shares are potentially more attractive from a value perspective.

What to Consider When Investing in Amazon Shares

There’s a lot to consider before buying Amazon shares in the UK.

Consider the following before proceeding:

Investment Risks and Volatility 

Past performance never guarantees future returns – and Amazon is no different. While it has grown significantly since going public in 1997, Amazon’s future success is not set in stone. Moreover, like many tech-oriented companies, Amazon shares are often volatile.

For example, Amazon’s share price has a 52-week high and low of $143.63 and $81.43, respectively. This means that you could see a rapid decline in your investment in a short period of time. This is why you should view Amazon as a long-term investment.

The best strategy is often to avoid short-term volatility and instead focus on the fundamentals. After all, the stock market moves in cycles. During good times, shares like Amazon will see a prolonged price increase. But during a recession, the exact opposite can happen.

Exchange Rate Fluctuations

If you want to buy AMZN shares in the UK, it’s important you assess exchange rate risks. After all, you’ll be depositing British pounds into your chosen stock broker. And then buying Amazon shares in US dollars.

This means that the exchange rate between pounds and dollars will impact your investment returns.

For example:

• Suppose you buy £100 worth of Amazon shares. At the time of the investment, the exchange rate between GBP/USD is 1.20. This means you’re buying $120 worth of Amazon shares.
• When you decide to sell your Amazon shares, they are worth 20% more than what you paid. This means that your original $120 investment is now worth $144.
• However, the GBP/USD exchange rate is now 1.30.
• So, when you convert $144 back to pounds, you’re only getting £110.77.
• As such, while Amazon shares increased by 20%, you’re actually only making returns of 10.77% when factoring in the exchange rate.

That being said, the exchange rate between pounds and dollars can also move in your favor. This will happen if the GBP/USD exchange rate declines after you make the share purchase.

Some Brokers Charge a Premium on Non-UK Shares

You should also consider investment fees when buying Amazon shares in the UK. This is because some UK brokers charge a premium on international shares. For example, Hargreaves Lansdown charges a 1% FX fee when investing in Amazon stock. You’ll pay this fee twice – when entering the market and again when you sell. This is in addition to Hargreaves Lansdown’s £11.95 commission (also charged twice).

In contrast, eToro allows UK investors to buy Amazon shares without paying any commission. Moreover, GBP payments are instantly converted to USD when making the deposit. While you’ll pay a 0.5% deposit fee, you can buy and sell international shares seamlessly – without being charged on each trade. This makes eToro cost-effective in the long run – especially if you’re planning to invest in lots of different US companies.

Don’t Try and Time the Market

If you’re worried about when to enter the market or how much to invest, it’s best to dollar-cost average your Amazon share purchases. This is a long-term strategy that allows you to avoid short-term volatility. This is because you will buy Amazon shares at a different price each time you invest.

Crucially. your cost price will align with broader market conditions. For example, during a recession, you’ll likely be able to buy Amazon shares in the UK at a lower price. And when the economy is strong, you’ll pay a higher price. This will average out over time.

Dollar-cost averaging requires you to create and follow a robust strategy. By this, we mean you should try and invest the same amount each time, at the same intervals. For instance, you might decide to buy £200 worth of Amazon shares after you get paid. Alternatively, you might invest on a weekly basis. Either way, for the best results possible, try and keep things consistent.

Don’t Put All of Your Investment Capital Into Amazon Shares

While Amazon is rated a ‘Strong Buy’ by the majority of sell-side analysts, you should still consider diversifying into other shares. After all, there is no guarantee that Amazon will meet Wall Street expectations. There is also no guarantee that Amazon shares will continue to rise long-term.

So, if you’re interested in US tech stocks, you might also consider Apple, Microsoft, Netflix, Alphabet, and Meta Platforms. However, you should also diversify away from the tech industry to reduce risks. This is because tech shares often move in tandem. For instance, when the economy is weakening, tech stocks are often the first segment of the market to decline.

So, be sure to explore other industries – such as pharmaceuticals, consumer goods, banking, and telecommunications.

You Won’t Receive any Dividends

For some, dividends are an integral part of investing in shares. After all, you can target two forms of growth – quarterly dividends and share price appreciation.

However, if you invest in Amazon stock, you won’t receive any dividends. As we mentioned earlier, Amazon has never paid a dividend, as it reinvests its retained earnings back into its growth.

How to Buy Amazon Stock UK Tutorial

If you’re ready to buy Amazon shares in the UK, we will now explain the process step-by-step.

We’re using eToro for this tutorial because:

• It’s regulated by the FCA and covered by the FSCS
• You won’t pay any commissions to buy or sell Amazon shares
• You only need to meet a $10 (about £8) minimum investment
• You’ll also have access to thousands of other shares
• It’s user-friendly and you can deposit funds with a UK debit/credit card, e-wallet, or bank transfer

Follow the steps below to buy Amazon shares in under five minutes.

Step 1: Open an eToro Account

First, you’ll need to visit the eToro website and open an account.

eToro will collect the following information from you:

• Full name
• Email address
• Mobile number
• Home address
• Date of birth
• National insurance number

eToro will send a code to your mobile phone via a text message. Type in the code to verify your number.

Step 2: Upload KYC Documents

All FCA-regulated brokers follow standard KYC (Know Your Customer) procedures. This means that eToro will ask for some verification documents to prove your identity.

First, upload a passport or driver’s license. Next, upload proof of address. For instance, a recently-issued bank statement or electricity bill.

You won’t need to wait long for eToro to verify the documents. The process is automated, so usually takes less than a minute.

Step 3: Deposit Money 

You’ll need to deposit some money before you can buy Amazon shares in the UK. There is a minimum first-time deposit of $50 for UK investors.

You can choose from the following payment methods:

• Debit/credit card
• Skrill
• PayPal
• Neteller
• WebMoney

Although eToro also accepts UK bank transfers, the minimum deposit increases to $500 (about £400).

Step 4: Search for Amazon 

You can now search for Amazon shares. Once you type ‘Amazon’ into the search box, you’ll see the stock appear.

As in the image above, you’ll see two search results appear. You’ll want to click on the ‘Trade’ button next to the first result. The result with ‘AMNZ.EXT’ is for out-of-hours trading.

Step 5: Buy Amazon Shares  

You’ll now see an order box appear. This is where you’ll be placing an order to buy Amazon shares in the UK.

The process is very simple at eToro. In the ‘Amount’ box, type in the amount of money you want to invest in Amazon. Remember, this should be stated in US dollars.

There is a minimum trade size of $10. Click ‘Open Trade’ to complete the order.

If the NASDAQ is currently closed, click ‘Set Order’ instead. eToro will execute the purchase once the NASDAQ reopens.

Conclusion

Amazon remains a ‘Strong Buy’ with the majority of sell-side analysts. Year-to-date, Amazon shares are up 60% – far outperforming the broader NASDAQ index. What’s more, Amazon’s most recent quarterly earnings report exceeded Wall Street expectations.

If you’ve done the research and want to buy Amazon shares in the UK, consider eToro. You won’t pay a premium to invest in US-listed stocks, as eToro offers a commission-free service. eToro is regulated by the FCA and covered by the FSCS – so safety is assured.

74% of retail investor accounts lose money when trading CFDs with this provider.

References

• https://www.wsj.com/market-data/quotes/AMZN
• https://www.google.com/finance/quote/AMZN:NASDAQ?sa=X&ved=2ahUKEwiW2ImO1o-BAxWBzjgGHd73ALcQ3ecFegQIMRAf&window=MAX&comparison=INDEXFTSE%3AUKX
• https://s2.q4cdn.com/299287126/files/doc_financials/2023/q2/Q2-2023-Amazon-Earnings-Release.pdf
• https://www.cnbc.com/2023/08/03/amazon-amzn-q2-earnings-report-2023.html
• https://finance.yahoo.com/news/amazon-is-quietly-building-the-most-powerful-advertising-machine-in-the-world-135753395.html
• https://www.fscs.org.uk/media/press/2019/apr/higher-protection-limits/
• https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22015
• https://www.cnbc.com/2018/12/18/dotcom-bubble-amazon-stock-lost-more-than-90percent-long-term-investors-still-got-rich.html
• https://seekingalpha.com/symbol/AMZN/ratings/sell-side-ratings
• https://www.cnbc.com/2023/08/20/top-wall-street-analysts-pound-the-table-on-stocks-like-amazon.html
• https://www.thestreet.com/trading/amazon-stock-gets-a-surprising-price-target
• https://www.usatoday.com/money/blueprint/investing/stock-forecast-amazon/
• https://www.statista.com/statistics/1331129/amazon-share-price-development-monthly/
• https://www.statista.com/statistics/265645/ranking-of-the-20-companies-with-the-highest-spending-on-research-and-development/
• https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloud-infrastructure-service-providers/

FAQs