Amazon shares could soar higher with air cargo service taking flight

The e-commerce and technology giant could see its shares soar even higher as its Prime Air fleet preps for major expansion in a move that would create an air cargo service to rival UPS.

Amazon could see its shares soar even higher with the stage set for its Prime Air fleet to expand to about 200 planes in a move that would create an air cargo service capable of rivalling United Postal Service (UPS), according to a study released by DePaul University.

‘At a time when many other airlines are downsizing due to the pandemic, Amazon’s push for faster and cheaper at-home delivery is moving ahead on an ambitious timetable,’ said the report by DePaul University’s Chaddick Institute of Metropolitan Development. ‘Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years.’

Amazon CEO Jeff Bezos launched Prime Air four years ago, with the air cargo service operating out of smaller regional airports located near to its warehouses with the aim of helping it move items to allow for one- and two day-delivery.

However, the e-commerce giant has invested $1.5 billion into a new facility based near Cincinnati which has the capacity for 100 aircraft taking around 200 flights each day. This new central hub is ‘a big deal’ and is crucial in Amazon moving to one-day shipping, according to Bezos.

Amazon still has a long way to go to before it has an air cargo service on par with UPS and FedEx but with the airline industry in turmoil, aircraft prices are sliding, making it the perfect time for Bezos to expand his fleet and his position in the overnight delivery services sector.

Amazon eyes driverless car start-up Zoox

Amazon is looking to acquire California-based driverless car start-up Zoox in a deal that could accelerate its automotive vehicle ambitions.

The deal is valued below its latest valuation of $3.2 billion based on its latest funding round in 2018, with the company receiving significant interest since its last capital raise from buyers, according to the Wall Street Journal.

‘Zoox has been receiving interest in a strategic transaction from multiple parties and has been working with Qatalyst Partners to evaluate such interest,’ the driverless car start-up said in a statement.

Analysts upbeat about Amazon

Amazon shares have climbed more than 25% year-to-date, outperforming the broader market with the S&P 500 down 7% over the same period.

Analysts believe Amazon shares could climb even further, with the company well-positioned to expand its presence in existing and new markets due to the shakeout brought about by the Covid-19 crisis which has wreaked havoc on the airline industry in particular.

Of the 45 analysts offering 12-month price forecasts for Amazon the median target sits at of $2700, with a high estimate of 3000 and a low estimate of 1840. The median target price implies a potential upside of 12.5%.

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