Amazon Bulls: Take Note of Company's Improving Operations

After last year’s bearish turn, Amazon stock is up 29% for the year, amid a broader mega-cap tech rally. The company wants to build on this success by continuing to improve its operations. These enhancements could provide plenty of upside for the stock, opening trading opportunities for Amazon bulls.

Amazon Improves Delivery Network, Cuts Costs

Much of the recent performance of Amazon (AMZN) stock stems from the company’s initiatives to enhance delivery operations. Per a Wall Street Journal report, Amazon “has enhanced its delivery network over the past several months to cut down on shipment times and control costs,” a Tip Ranks article said.

Changes were necessary after a cloudy outlook stemming from last year’s weakness. As inflation and rates rose, they spurred recession fears. Consumer demand for online goods started to decline.

Cutting costs was one way to adapt. Amazon underwent staff reductions amid mass layoffs, like many big tech companies. However, personnel reductions weren’t the only focus.

Additionally, Amazon “improved its inventory management and modified the search results on its website to highlight products with quick delivery,” per the Tip Ranks report. As such, delivery expenses were cut down, which allowed the online retailer to only see a 2% year-over-year increase in global shipping costs during the first quarter of 2023 versus a 14% increase in the prior year’s quarter.

Continuing to enhance delivery efficiency could help contribute to the Amazon bottom line. That should also appease the bulls should these continued operational enhancements bear fruit in the form of continued or increased profitability in the next earnings reports.

“Looking forward, Amazon plans to increase the number of its same-day centers to at least 150 in the next few years,” the Tip Ranks article mentioned. “This is because the company saw a 50% surge in customers choosing the same-day delivery option during the most recent reported quarter.”

2 Ways to Trade Amazon

To maximize gains, traders could use a margin account and obtain more shares with leverage. However, there are also exchange traded funds (ETFs) from the Direxion Investments suite of leveraged ETFs that can offer increased exposure to Amazon stock that’s already baked into the fund.

If Amazon can continue trending higher, consider the Direxion Daily AMZN Bull 1.5X Shares (AMZU). AMZU seeks 150% exposure to Amazon stock, giving bullish traders added leverage to extract more gains from their convictions.

On the other end of the spectrum, inverse ETFs also allow traders to take the opposite side should the stock’s direction trend downward. As such, traders can use the Direxion Daily AMZN Bear 1X Shares (AMZD), which provides inverse exposure to Amazon stock so traders can easily profit from the downside for any negative market movers, like a worse-than-expected earnings report.

For more news, information, and analysis, visit the Leveraged & Inverse Channel.