Amazon shares are back on the rise - which is why it might be the right time to buy them

Amazon shares are back on the rise: here's why it might be the right time to buy them - amazon 2 e1610639695893Could this be the beginning of the rebound investors have been waiting for?

What happened 

Le Amazon shares They rose Thursday, following bullish comments from the e-commerce giant's leaders and better-than-expected consumer spending data. At 14:33 pm, Amazon's stock price was up nearly 5%.

Like many retailers, Amazon's profits have been dented by coronavirus-related supply chain disruptions and geopolitically driven increases in energy prices. Rising product, transportation and fuel costs are an ongoing challenge.

At the same time, Amazon is facing over-compliance

The e-commerce giant has invested tens of billions of dollars to build warehouses and other distribution centers to meet the torrid demand of online shoppers during the early stages of the pandemic. But with e-commerce sales slowing and returning to traditional retail stores, Amazon now finds itself with too much warehouse space.

During a meeting with Amazon shareholders on Wednesday, CEO Andy Jassy acknowledged the problem and said the company is working to scale its fulfillment network, delaying new builds and letting some leases lapse. . Jassy also said he was "fairly confident" that Amazon will use the remaining capacity as sales increase.

Additionally, Jassy has pledged to restore Amazon to a "healthy level of profitability" by prioritizing cost-cutting initiatives. “We have already effectively reduced our cost structure in the past and I am very confident that we will get back on track as we face these incredibly unusual last two years,” she said. 

Forecasts for the future

Inflation has also forced consumers to cut back on discretionary shopping. But consumer spending grew 3,1% in the first quarter, according to the U.S. Department of Commerce report released Thursday. This is an increase from the previous estimate of 2,7%. The higher consumer spending figures bode well for Amazon, which accounts for roughly half of all online retail sales in the United States.

Furthermore, if Jassy can deliver on its promise to reduce the company's costs, Amazon's profits - and, consequently, its share price - could rebound faster than the market expects. This could lead to substantial gains for investors who buy the stock today.