Running Header: Stock Picks Rational 1

Stock Market Paper

Brittney King

JB Gammon

Central Piedmont Community College

Running Header: Stock Picks Rational 2

After doing an initial analysis research on the stock market, and on the difference type of

companies, I have decided the three main companies that I wanted to invest my money in.

Starting at the beginning of the class and possessing $25,000, I have divided the amount in a way

of: Amazon ($12,000), Apple ($9,588), and lastly Netflix ($3,412).

The first company that I’ve chosen to buy stocks in was Amazon (AMZN). I decided to

invest $12,000 into Amazon with at starting of 6 shares. In 1995 Jeff Bezos started his launch of

Amazon in his garage then becoming an online bookstore selling, DVD, music, videogames, and

other products. Eventually five years later Jeff Bezos was named Time Magazine “Person of the

Year” from him popularizing online shopping eventually becoming a successful company of

today (Schneider,2018). Amazon (AMZN) was the first company that I invested in for its main

stance in the global E-Commerce dominating most of the cloud businesses such as eBay,

Alibaba, Google, etc. that has led most of those businesses to fail (Chhatwal, 2018). According

to another article a lead competitor of Amazon is Alibaba (BABA) best known for their success

from their revenue for the last few years comes from how they set up their information for

entrepreneurs to start their company. Their website is to bring entrepreneurs online making a

network business that could help vendors become entrepreneurs based off of what they sale

(Mourdoukoutas, 2018). From the Chinese brokers that analyze Alibaba they couldn’t find a

selling rate but the company target price is $197.51, making their shares 15% higher (Bosa,

2017).
Running Header: Stock Picks Rational 3

Figure 1. 1-year stock price comparison of Amazon to Alibaba retrieved from Yahoo.

However there have been some news about Amazon that had questioned their tactics

upon what is next for them. In October Amazon was being sued by eBay for accusing the

company of orchestrating a scheme to steal the company’s biggest sellers by creating fake eBay

accounts reaching to their sellers to cross over being Amazon sellers (Tiffany, 2018). Recently

the company had been expanding their nationwide extortion where they chose two places instead

of one (Northern Virginia and Queens) (Magary, 2018). Some individuals see that with the

company choosing these two places to expand from their main headquarters in Seattle the new

locations may not be equipped to take on the challenges and high stakes of being a top online

business and distributor.

With the final tracking of Amazon over the course of these 16 weeks there lies a question

of whether buying, selling, or keeping the stock is essential. The problem with Amazon market

tracking was that with investing into this company $12,000 at the end of the tracking I lost

$2,212.98 in profit resulting in end result of $9,787.02. Looking at the market you could see that

Amazon market value fluctuates a lot from the beginning till the end mostly making a profit at

the beginning of tracking. This is a major change for this company predicting a major increase
Running Header: Stock Picks Rational 4

by the end of the year they aren’t making in types of advancements to increase their Value of

Shares.

At the beginning of 2014 Amazon was at a 46.26% change from the previous year where

in 2016 averaged 266.17% towards the end of the year. Today Amazon analyst found that the

company has one selling rate and that it is 17% mean of its target at $1,150.46 (Bosa, 2017).

Even in the second quarter Amazon commerce business revenues went up 60% making a hit at

$31.86 billion dollars. With Amazon e-commerce and brick-and-mortar sales including other

subscription revenues scored at a high of 57% with the earnings of $3.41 billion in that same

quarter (Rains,2018). In the third quarter there was a concern that there was missed revenue

estimates, but the company rose to $52.9 billion. Amazon third quarter rose 39% making a

slightly higher revenue from their last quarter.

Figure 2. Four Year Stock Market of Amazon retrieved from Yahoo.

Morgan Stanley raising Amazon shares that the price target from $1,850 to $2,500

investment giants finds that Amazon ability to generate money and making a profit could
Running Header: Stock Picks Rational 5

generate a high margin for years (Deagon, 2018). It is estimated that by 2020 Amazon would

earn around $45 billion dollars from this year $25 billion. Amazon growing advertising business

has made a tremendous part in advancing their Amazon Prime services to customers. Most of

their analyst predict that after their market evaluation that they would see about $1.2 trillion from

its current market cap $956 billion (Deagon, 2018). Nowak wrote, "We have increasing

confidence that Amazon's rapidly growing, increasingly large, high-margin revenue streams will

drive higher profitability and continued upward estimate revisions,”. Amazon has recently been

planning to expand their company from not only their web services but in insurance comparison

businesses which is another spectrum of what the web service already offers. Amazon just

recently started into expanding their business in providing groceries, original content, and cloud

with talks of a possibility of pharmaceuticals.

Figure 3 Amazon 6-month market of profit gain and lost retrieved from Yahoo Finances.

In the past twelve months amazon has gained 67.76% and 121.44% in the last two years

making a total revenue of $150.12 billion (Mourdoukoutas, 2018). Moreover, the company

reached 52 Week High of $233.47. Amazon has made a 30% increase this year which is
Running Header: Stock Picks Rational 6

predicted to increase later in the next year. Ultimately the prediction and the statistics seems to

add up in, but there is major uncertainty in reinvesting my stocks back into the company due to

the outlook already from the beginning of the year to now. I would be selling my stock and

finding another company to invest into in the next year.

The second company that I have invested into was Apple (APPL) with 45 shares at

$9,588. The reason why I decided to chose this stock is based on the popularity of the phone and

the upcoming/released new phones that was featured this year to make quite some money on the

market. Their main competitor this Samsung is a South Korean founded by Byung-Chul as a

trading company first in Taegu, Korea later becoming multinational manufacture and trader that

export and produces electronics, heavy duty/construction, appliances, and many other items

(Burris, 2018). Their hottest selling item at the moment is the Galaxy S9 and Galaxy Note S9.

Samsung introduced the Galaxy S9 with the new AR emoji that is able to capture anyone’s face

and make it into a character just like Iphone X (Hall, 2018). The design of the phone has the

same qualities as the previous Samsung Galaxy S8 with the display size at 5.8 inches with the

OLED screen, Face ID, and has higher RAM starting at 64GB for storage rather than Iphone X

who offers 64 and 256 GB. But the price for both phones sets a stand at which phone offers

much but for little with Samsung S9 starting at $720.00 and the Iphone X starting at $1,000.
Running Header: Stock Picks Rational 7

Figure 4. 1-year stock price comparison of Apple and Samsung retrieved from Yahoo.

The main reason for Apple success is their new release of their Iphone X, Iphone XS, Iphone XS

Max, and Apple Watch Series 4 that has caused a major change in technology history.

According to the stock market it seems like Samsung isn’t making enough money because of “a

slowdown in many markets” (Pham, 2018). With the South Korean technology mogul their stock

has went down 11% this year with $39.4 billion dollars erased from their capital (Kharpal, 2018).

Recently there has been a battle with trade in China and their tariffs accumulating to $200

billion since Trump put so many technologies on the hit list for high tariffs (Mullaney,2018). In

2015-2016 Apple took a large hit with China where their shares lost a quarter of their value.

Apple sales in China accumulate to 21%. A Reuters analysis estimated that $15.7 billion of U.S.

(Mullaney, 2018). China merchandise trade deficit last year because of their iPhone. But today

Apple is worth $1 trillion in their value despite the downward surge in China and their

unresolved problem. On another note Apple is trying to find their way in the car business with

Tesla kicking Elon Musk out of the park since they are investing into a self-driving car project
Running Header: Stock Picks Rational 8

called, “Project Titan” (Owens, 2018). There are many plans for the advancement of the Apple

Co yet to come with Tom Cooks as CEO. Apple has made great success with their new software

and techs but consumers and retailers says otherwise. Apple shares have droppd by 5 percent on

Monday after supplies from the largest consumers have reduced shipments. Apple was looking at

a $245 price target set by Guggenheim’s Robert Cihra but was cut for he stated,” Unlike last year

[we] do not see ASP (average selling price) increases providing enough offset, with our forecast

that blended iPhone ASPs increase only +3%Y/Y, leaving iPhone revenues -2%Y/Y," (Melloy,

2018). May concerns has rose from USB cuts in between the 12-month price target at $225 from

$240 and the lowering of Iphones unit sales estimate for the current quarter 73.5 million from 75

million (Melloy,2018). Being a number one phone competition and going into the upcoming

December it is forecasted that the company will make a comeback by the end of the year.

With the final tracking of Apple (APPL) over the course of these 16 weeks there lies a

question of whether buying, selling, or keeping the stock is essential. There wasn’t a major

change in the stocks for with investing into this company $9,588 at the end of the tracking I lost

$937.65 in profit resulting in end result of $8,605.35. Looking at the market you could see that

Apple market had a steady increase starting from the beginning of the year till about right now

where it’s around the new releases of their major products the Iphone XR, Iphone XS, Iphone XS

Max. This is a major change for this company predicting a major increase by the end of the year

but if sales don’t promote consumers to buy during the major Black Friday or Cyber Monday it

may cause a different result at the end of the day versus when they first started the company.
Running Header: Stock Picks Rational 9

Figure 6: Apple four-year stock market loss and profits retrieved from Yahoo Finances.

According and chart above to Seeking Alpha analyst recorded Apple progress in their

earlier years 2015-2016 specifically where the company received a panic over the last Iphone 6s

launch. The fiscal period in 2016 showed that the company in the last three quarters dropped at

Q2 16.3%, Q3 15%, and Q4 5.3% just from Iphone sales units and phone carriers making

consumers pay the retail price versus monthly payments (Seeking Alpha). Today analyst have

found that Apple shares has been down $40 which is a all time high with their decline in sales at

17% after closing Monday. Analyst Ming-Chi Kuo reported that the new Iphone XR growth

forecast, be cut by 30% due to the negative misleading of the company guidance to consumers.

Tom Cook has turned the company into a new technology war machine for their growth

this year has been tremendous for Apple has a $2.72 share in fiscal dividend to their investors

ending their third quarter with a $243.7 billion (Owens, 2018). In their 52-week analysis their

stock has grown 10.7% over the past month. Even as revenue is growing it is set to grow 15%

this year, while the net worth is based to grow 24% this year. One of Apple’s top technology
Running Header: Stock Picks Rational 10

that has passed their predicted revenues are their sales in their wearables that earned $3.7 billion

at the beginning of the year now worth $10 million (Poletti, 2018). At the end Apple is a great

company to invest in but after losing about $1,000 in profit it is risky to predict the sales of their

new phones at the beginning of the year. So, I would be selling my stocks.

The last company that I have invested in was Netflix at $3,412 into the company with 10

shares. Netflix competitor is HBO provided by Spectrum Cable Company. Spectrum founded in

1993 by Barry Badcock, Jerald Kent, and Howard Wood serving more than 41 states. One

streaming service that Spectrum offers to their cable consumers is HBO for $14.99 a month with

their main shows being The Game of Thrones and Wonder Women. The company has seen an

increase in their subscriber growth in 2017 where they made a whole revamp in their

programming where subscribers are able to have access to their favorite shows without having to

be with a cable company (Bond, 2018). The company bought now today has bought in revenue

of $76.8 billion from their favorite shows and listings. HBO global subscriptions base of 134

million in 2016 has only grew 2% making not as much of a difference than Netflix (Shen, 2017).

Figure 7. 1-year stock price comparison of Netflix and Spectrum retrieved from Yahoo.
Running Header: Stock Picks Rational 11

According to the chart above you can recognize that Netflix is out beating the

competition. Netflix has a monthly subscription of $9.99 that offers a wide variety of their own

original shows and movies, cable saga’s, and movies. With the Netflix major saga Orange is the

New Black and House of Cards the company pulled in revenue of $77.5 billion just out beating

HBO (Shen, 2017).

Netflix is trying to start a new wave of streaming that some people may enjoy. It was

reported that Netflix would be testing out a mobile plan where user/consumers will only have to

pay half of their monthly subscription than the normal subscriptions (Hayes, 2018). According to

an article in Quartz Netflix found that “60 percent of members around the world now open

Netflix mobile app at least once a month to watch a TV show or movie: (Hayes, 2018). This

could be a really huge thing for Netflix for it gives a better offer than other streaming services

like HBO, HULU, YouTube, etc.

With the final tracking of Netflix over the course of these 16 weeks there lies a question

of is Netflix able to regain their profits. The problem with Netflix market tracking was that with

investing into this company $3,412 at the end of the tracking I lost $438.00 in profit resulting in

end result of $2,944.00. Looking at the market you could see that Netflix market value

fluctuates a lot but as it got towards the end it just ended very badly.
Running Header: Stock Picks Rational 12

Figure 8: Netflix stock over the last four years profits and lost retrieved from Yahoo Finances.

In earlier years Netflix had taken major hits in the stock market where they lost

tremendously due to corporate mistakes in shareholders from the graph above. It took a couple of

years for the company to redeem itself back into the domestic market in video streaming where

they started setting plans to expand. It wasn’t until 2015 when the company started to sink back

down due to financing. It was in 2016 where the company monthly subscriptions fee for

customers rose at 12% in 2016 to $8.80 including 15% domestic boost and subscribers (Bylund,

2017).
Running Header: Stock Picks Rational 13

Figure 9: Netflix stock in the past 6 months retrieved from Yahoo Finances.

Netflix stock chart up above has been recently today be going down since some of their

shows, TV episodes, and movies were not up to their customers liking causing a major effect in

their stocks in the second quarter. It wasn’t until late summer that all their loss was going to be

revived again since Netflix stock rose to 15% since Aug. 17 that closed at $364.58 (Kelleher,

2018). Even as the stock is lower than it was anticipated, on July 9 the earnings were at $418.97

making that week the strongest one in a several months for the second quarter.

Another downfall of Netflix stock was their subscriber growth which started out in the

second quarter as 5.15 million new subscribers making it below the target forecast of Wall Street

analyst (Kelleher, 2018). This came from when Netflix didn’t release any of the top hit shows

and movies that viewers were looking forward to causing Netflix to lose 24% of their shares

value for the next month. Now in the fourth quarter will see again the top shows series Orange is

the New Black, Ozark, Daredevil, Narcos, and Making a Murder. Netflix has grown more than

80% this year because of the international growth and partnerships making video streaming easy

and warding off competition (Sonenshine, 2018). At the end of the marketing tracking for Netflix

I would reinvest my stock for the fact that the company is making changes towards how they are

approaching and reaching out to new subscribers especially college students to be on their

network since they provide a variety of entertainment.

Running Header: Stock Picks Rational 14

Stock Tracker
Running Header: Stock Picks Rational 15

References

Apple (APPL) Hits 52-Week High, Can the Run Continue? (2018). Yahoo Finance. Retrieved

from https://finance.yahoo.com/news/apple-aapl-hits-52-week-132901042.html

Bosa, Deirdre (2017, September 1) Alibaba vs. Amazon: The race to $500 billion. Retrieved

from https://www.cnbc.com/2017/09/01/alibaba-vs-amazon-the-race-to-500-billion.html

Bylund, A. (2017, March 23) Where Will Netflix, Inc. Be in 10 Years? The Motley Fool.

Retreived from https://www.fool.com/investing/2017/03/23/where-will-netflix-inc-be-in-

10-years.aspx

Hayes, B. (2018, Nov. 14) Netflix is testing cheaper subscription tiers for Monster who only

watch movies on their phones. AVNEWS. Retrieved from

https://news.avclub.com/netflix-is-testing-cheaper-subscription-tiers-for-monst-

1830447020

Britt, R., & Deagon, B. (2018, August 20). Amazon Stock Clears 2,000 Threshold, Get Closer

To $1 Trillion Club. Investor’s Business Daily. Retrieved from

https://www.investors.com/news/technology/amazon-stock/

Chhatwal, R. (2018, August 30). Apple: Big Red Flags. Seeking Alpha. Retrieved from

https://seekingalpha.com/article/4203079-apple-big-red-flags

Figure 1: Amazon Stock Quote (2018, October 5). [Graph 1-year stock comparison of Amazon

and Alibaba] Retrieved from https://finance.yahoo.com/quote/BABA/chart

Figure 2. Amazon Stock Quote (2018, Nov 14)[ Graph 4-year stock profit and loss] Retrieved

from https://finance.yahoo.com/chart/AMZN
Running Header: Stock Picks Rational 16

Figure 3. Amazon Stock Quote (2018, Nov. 14) [ Graph 6-month comparison] Retrieved from

https://finance.yahoo.com/chart/AMZN

Figure 4. Apple Stock Quote. (2018, October 5). [Graph 1-year stock price comparison of Apple

and Samsung]. Retrieved from https://finance.yahoo.com/quote/005930.KS/chart

Figure 5: Apple Stock Market (2018, Nov. 14)[ Graph of four year comparison] Retrieved from

https://finance.yahoo.com/chart/AAPL

Figure 6: Apple Stock Quote (2018, Nov. 14)[Graph of 6-month comparison] Retrieved from

https://finance.yahoo.com/chart/AAPL

Figure . Netflix Stock Quote (2018, October 5). [Graph 1-year stock comparison of Netflix and

Spectrum]. Retrieved from https://finance.yahoo.com/quote/CHTR/chart

Figure 8: Netflix stock (2018, Nov 14). [Graph last four years profits and loss] Retrieved from

https://finance.yahoo.com/chart/NFLX#

Figure 9. Netflix Stock (2018, Nov. 14). [Graph 6 months] Retrieved from

https://finance.yahoo.com/chart/NFLX

Magary, D. (2018, Nov. 14) Amazon Played Everyone. QG. Retrieved from

https://www.gq.com/story/amazon-jobs-jobs-jobs

Melloy, J. (2018, Nov. 14) Apple downgrade, more Iphone estimates cut as Street starts to turn

on the stock. CNBC. Retrieved from https://www.cnbc.com/2018/11/14/apple-gets-

downgraded-more-iphone-estimates-cut.html

Mittal, Tarun (2018, February 12) How the Alibaba Group grew from a small apartment to a

global e-commerce giant. Retrieved from https://yourstory.com/2018/02/the-story-

behind-the-alibaba-group/
Running Header: Stock Picks Rational 17

Mullaney, Tim. (2018, August 30). Trump’s reported plan to slap China with tariffs on $200

billion, Apple and other blue chips brace for the fallout. CNBC. Retrieved from

https://www.cnbc.com/2018/08/30/apple-and-the-other-blue-chip-stocks-still-at-risk-in-

global-trade-

war.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C&par=yahoo&yptr=

yahoo

Mourdoukoutas, Panos (2018, May 6) Why Alibaba is More Profitable than Amazon. Retrieved

from https://www.forbes.com/sites/panosmourdoukoutas/2018/05/06/why-alibaba-is-

more-profitable-than-amazon/#23fb248b1678

Pham, Sherisse. (2018, October 5). Apple helps Samsung surge to record profit. Retrieved from

https://www.cnn.com/2018/10/05/business/samsung-stock-earnings/index.html

Poletti, T., & Owens, J. C. (2018, August 30). Now would be the time for Apple to buy Tesla,

and kick Musk out of the driver's seat. MarketWatch. Retrieved from

https://www.marketwatch.com/story/now-would-be-the-time-for-apple-to-buy-tesla-and-

kick-musk-out-of-the-drivers-seat-2018-08-27?siteid=yhoof2&yptr=yahoo

Rains, Benjamin. (2018, August 29) Amazon Stock Is Still A Must Buy at New High After

Morgan Stanley Upgrade. Yahoo Finance. Retrieved from

https://finance.yahoo.com/news/amazon-stock-still-must-buy-203308921.html

SEEKING ALPHAS (2018, Nov. 13) Apple: Not a Repeat of 2015-16. SeekingAlpha. Retreived

from https://seekingalpha.com/article/4221832-apple-repeat-2015minus-16

Shen, Lucinda (2017, July 18). How Netflix is winning the Game of Thrones Against HBO.

Retrieved from http://fortune.com/2017/07/18/netflix-stock-time-warner-hbo/

Running Header: Stock Picks Rational 18

Sonenshine, J. (2018, August 27). Netflix Stock Is on a Mini Winning Streak- Here’s Why. The

Street. Retrieved from https://www.thestreet.com/markets/netflix-is-rallying-here-is-why-

14694485

Tiffany, K (2018, Oct. 18). eBay is suing Amazon over an alleged “scheme” to steal its top

sellers. Vox. Retrieved from https://www.vox.com/the-goods/2018/10/18/17995484/ebay-

amazon-lawsuit-poaching-sellers-messaging

References