How to Invest in Amazon Shares in the UK
Updated August 15, 2024
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51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Investing in Amazon UK shares is a great opportunity, as the investor can benefit from a rising stock price. However, it is always important for the investor to invest only what they can afford and to use an official trading platform/broker to avoid scams.
Amazon is one of the best-known eCommerce companies in the world.
It is well known as an online store where you can buy almost anything.
It operates from more than 150 fulfilment centres to deliver to customers in 100 countries globally.
The brand is also known for innovation with AI, automation and online services. Therefore, many believe they can make money when they invest in UK Amazon shares.
Investing in Amazon has numerous benefits for the investor.
For example, there is the chance to benefit from capital appreciation, where the stock price increases after purchase. Another benefit is the ability to diversify your portfolio, allowing you to protect yourself from market turbulence.
It is always risky making any investment. It is vital to ensure that you carry out proper due diligence. You should also ensure that you don’t invest more than what you can afford to lose.
So, how do you invest in Amazon stock, considering that it is a US company? The process is relatively simple, but there are things to take into account when thinking about how to invest in Amazon stocks.
What Is Amazon?
Amazon is the world’s largest eCommerce brand across the world, operating in numerous countries and delivering to over 100.
It is also one of the largest employers in the world, employing more than 1.5 million people globally.
It’s a very innovative company, looking into automation and AI to help it run its business and reduce costs.
One of the key automations is robots that can pick and pack orders. And it’s expanding into automated deliveries with Amazon Air that will use drones to deliver orders within 30 minutes of an order.
Amazon has made several innovations that have helped the business grow in strength from its humble beginnings as an online bookstore, with global aspirations.
Its founder, Jeff Bezos, always wanted Amazon to sell everything and anything. This is part of the reason why he named the company Amazon, with the logo featuring an arrow between the A and Z.
Can You Invest in Amazon UK Shares?
Yes. People in the UK can invest in Amazon shares. But it is a little more challenging than it would be for a US citizen.
Amazon is a US company registered on the US Nasdaq exchange in New York.
Therefore, if you would like to invest in Amazon you need to work with a broker or exchange that offers access to the Nasdaq exchange. There are numerous UK trading platforms that do offer this feature.
Do not assume that a free trading platform is best. Always check for suitability before opening an account.
In addition, UK citizens need to complete a W-8BEN form with the US authorities to confirm they’re not tax residents of the US. Otherwise, they might need to complete tax returns for the US government and be made to pay for any profits they make when they invest in Amazon.
Are Amazon Shares a Good Investment?
When thinking about how to invest money in Amazon, there are numerous considerations to determine.
Any UK Amazon investment should be done with due diligence. No investment should be made with funds that are required for day-to-day living. Only invest with funds that you can afford to lose.
Many people invest in businesses because they can expect an income from the investment. It can be harder to do so with Amazon. Amazon does not pay out dividends to shareholders. The company does not have a history of paying dividends to shareholders.
When the company has paid out dividends, it paid $0.20 per share. At the lowest share price over the past five years, it would take 370 years of dividend payments to earn the share price back relying on dividends alone.
However, there are also many advantages of an investment in Amazon UK.
Its strong performance is a good indicator that it’s a strong asset to any portfolio. The company’s share price over the past five years has increased 48%. However, at one point in 2021, the share price was worth 300% of what it was worth in 2018. Therefore, there is potential to sell Amazon shares at a good profit.
With the innovation that is continuous at Amazon, there is a significant potential for an upward trend for the share price. Some of the key innovations that might signal strong growth in the future include artificial intelligence and automation.
However, Amazon is also in a strong market position. In America, about 10.4% of all online purchases are made via Amazon.com. And it’s likely to achieve more market penetration in the future.
Amazon is opening grocery stores where users don’t need to use a till. They pick up the items and are then charged when they leave the store. It provides them with a unique position in a crowded market. With plans to open more of these stores across the USA, UK and other locations, there is plenty of growth potential.
Diversification can be another benefit of investing in UK Amazon shares. Diversification is about investing in companies in different niches and industries, so when one sees a slump, growth in another should offset some of the losses. Using this strategy can help investors to weather economic downturns or when companies have a drop in value.
Amazon is by no means safe from market risk. Though because it relies on a strategy of diversification itself, it can protect itself from certain areas of its brand seeing a decline in economic activity.
The Best Brokers for Investing in Amazon Shares UK
1. Pepperstone
Pros
- Extensively regulated
- No minimum deposit
- Low fees and mostly free withdrawals
- Good customer service
Cons
- No investor protection for clients outside UK, EU and EEA
- Withdrawal fee for international bank wires
- CFDs only
Pepperstone allows traders to invest in Amazon shares through Contracts for Difference (CFDs). This method enables traders to speculate on the price movements of Amazon shares without actually owning the underlying stock.
When trading Amazon shares with Pepperstone, you're trading CFDs, which means you're speculating on the price movement of Amazon shares rather than owning the actual stock. This allows for both long (buy) and short (sell) positions.
Pepperstone offers leverage up to 1:20 for share CFDs, which can amplify both potential profits and losses. This is particularly useful for traders looking to maximize their exposure with a smaller initial investment.
Pepperstone offers competitive spreads and low commissions on share CFDs. For example, the commission on US share CFDs is typically around 0.02 USD per share. This cost-effective structure is beneficial for traders looking to manage their trading expenses effectively.
Pepperstone is regulated by multiple top-tier financial authorities, including the FCA (UK) and ASIC (Australia), ensuring a secure trading environment. This regulatory oversight provides traders with confidence in the platform's integrity and reliability.
2. eToro
Pros
- Regulated by FCA, ASIC
- No withdrawal fee for US clients
- 0% commission on stocks
- Social and copy trading
Cons
- Not available in every US State
- More expensive than most of its competitors
- No MetaTrader platforms
eToro is a well-known social trading platform that allows you to invest in stocks, including Amazon, as well as other assets like cryptocurrencies.
It offers a user-friendly interface and provide a range of tools for trading and investing.
With eToro's unique feature called 'CopyTrading', you can automatically replicate the trades of successful investors.
eToro also provides a virtual trading account where you can practice trading strategies without risking real money.
It's worth noting that eToro operates on a commission-free model, but it charges spreads on trades.
51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
3. AvaTrade
Pros
- Trading signals and strategies
- Automated trading
- User-friendly interface
- Variety of trading pairs
- Transparency
Cons
- Reliance on signals
- Subscription cost
AvaTrade is a top choice for investors looking to trade Amazon shares in the UK, offering a range of features and services tailored to meet the needs of both beginner and experienced traders.
AvaTrade is a regulated broker with licenses from multiple reputable financial authorities, including the Central Bank of Ireland, the Australian Securities and Investments Commission (ASIC), and the Financial Services Commission (FSC) of the British Virgin Islands. This regulatory oversight ensures that AvaTrade operates with transparency, security, and adherence to strict standards, instilling trust among investors.
AvaTrade provides access to a wide range of global markets, including stocks from major exchanges such as the New York Stock Exchange (NYSE) and NASDAQ. This allows UK investors to easily invest in Amazon shares and other international stocks through a single trading account.
AvaTrade offers user-friendly trading platforms that are suitable for investors of all levels of experience. Whether using the popular MetaTrader 4 (MT4) platform, the proprietary AvaTradeGO mobile app, or the advanced AvaTradeAct platform, investors have access to intuitive interfaces, advanced charting tools, real-time market data, and customizable features.
AvaTrade offers competitive pricing for trading Amazon shares, with transparent fee structures and tight spreads. This ensures that investors can execute trades with minimal costs, allowing them to maximize their investment returns.
AvaTrade provides access to leverage and margin trading, allowing investors to amplify their trading positions with a relatively small amount of capital. While leverage can magnify both profits and losses, it provides an opportunity for investors to increase their exposure to Amazon shares and potentially enhance their investment returns.
AvaTrade offers a range of risk management tools to help investors mitigate potential losses when trading Amazon shares. These tools include stop-loss orders, which allow investors to specify the maximum amount they are willing to lose on a trade, helping to protect their investment capital.
AvaTrade provides a wealth of educational resources to help investors improve their trading skills and knowledge. These resources include tutorials, webinars, market analysis, and trading guides, covering a wide range of topics relevant to investing in stocks like Amazon.
4. IG
Pros
- Highly regulated
- MetaTrader 4 (MT4)
- Over 10,000 instruments
- Available in the UK and US
- 24/7 customer support
Cons
- High fees
- No deposit compensation scheme for US accounts
- No copy trading
- Inactivity fees
IG is a well-regulated broker in the UK, offering access to a variety of financial markets, including stocks.
It provides a user-friendly trading platform, competitive fees and a range of educational resources for investors.
IG is a reputable broker with a strong presence in the UK and offers access IG offers a range of research tools, including real-time market data, charts and analysis, to assist with investment decisions.
It offers both share dealing and CFD (Contracts for Difference) trading options, allowing you to choose the approach that suits your needs. IG has competitive pricing and provides access to a wide range of international stocks.
How to Invest in Amazon UK Shares
While there are complications with investing in Amazon UK shares, it is not impossible and just requires a few additional steps.
When considering how to invest in Amazon shares, here are the steps you might want to follow.
Step 1. Technical Analysis of Amazon
The first step is to complete a technical analysis of your options. Amazon, like any other business on a stock exchange, will experience highs and lows.
Looking at charts and graphs, you can determine whether now is the best time to invest in Amazon UK stocks. If the price is at a high, waiting might be a better strategy. However, if the price is low, investing might be a better option.
Numerous sites can offer good analysis. For instance, you might need to look for:
- Highest price of an Amazon share in the past year.
- Lowest price of an Amazon share in the past year.
- Annual trend of Amazon shares in the past year.
Step 2. Find the Right Provider and Account
Once you’ve decided that it is the right time to invest in Amazon, now you need to find a broker or trading platform. Several factors need to be considered when choosing either a broker or platform.
These factors include:
- A platform that will trade in US shares
- What the account fees are for using the service
- What commissions are available on each trade
- Whether they have access to the type of investments you would like to make
- Do you have access to the right research and educational tools?
- Are there fees for withdrawal and inactivity fees?
- Is there a demo account option? A demo account can help improve your investment strategy
- Do they offer support for new traders?
There are several UK trading platforms that you might want to consider using. There is no one specific platform that is better than another, partly because everyone’s needs are vastly different.
Therefore, you need to choose what you need and what is on offer before selecting the right broker/trading platform.
Step 3. Deposit Funds
Now you need to open an account with the trading platform or broker. To open an account, you might need to provide certain information such as your name, address, bank details and proof of ID. Each platform is different.
When you open your account, you will probably be required to deposit your initial funds. Consider carefully how much you want to invest. You need to ensure that you’re only investing an amount you can afford to lose.
Your risk tolerance can be dependent on personal and financial circumstances. Though there might be a minimum deposit you have to put in.
Payments can be made via bank transfer, credit or debit cards, Google Pay or Apply Pay.
Step 4. Complete the W-8BEN Form
Once an account has been set up, UK investors will need to complete the W-8BEN form to invest.
This is a tax form for non-US residents. It allows investors to trade in stocks/shares within the US, and collect the profits without paying taxes to the US.
Step 5. Decide on Investment Strategy for Amazon UK Shares
There are numerous strategies you can use for investing. You can hold onto shares, and then sell them when the value is higher. Or you can do spread sharing.
There are also options for long-term trades, day trading, end-of-day or other strategies. It depends on your personal preference.
One strategy that might not work is relying on dividends. Amazon does not pay dividends often.
Step 6. Place Trade in Amazon UK Shares
Once you’re satisfied with the deposits in the trading account and with a strategy, you can make a trade for Amazon shares.
When using an online trading platform, you need to find the investing screen, and then search for Amazon shares, which use the shortcode AMZN.
Then you can select the number of shares that you would like to invest in and complete the transaction.
The timing of the trade is important. AMZN shares can only be traded when the New York Stock Exchange is open, which is at a different time to the UK stock exchange, about 2:30 p.m. to 9 p.m.
Step 7. Monitor and Manage Amazon Share Investment
After purchase, you need to monitor and manage the Amazon investment.
With some trading platforms, you can set notifications for when share values reach certain points. Or you can monitor every day to check the value of the stock.
Risks to Consider When You Invest in Amazon UK Stocks
When thinking about how to invest in Amazon stocks, there are numerous risks to consider first.
Market volatility can affect shares significantly. There are signs to watch out for, which include consumer spending, the interest rates set by central banks, trade deals, and more.
In addition, there is lots of competition in niches that Amazon trades with. A new competitor, Temu, is trying to steal some of the customers that are with Amazon. There are also more streaming services than before, which are competing with Amazon Prime.
While competition is good for business, it can sometimes mean that revenues are reduced, which can signal a downturn in the share value.
There is also a high dependence on key personnel within Amazon. The company’s success has been closely tied to the vision and leadership of its leadership team. If one of these were to leave, it could reduce the value of the company.
The company is also international; the global presence has several benefits but also places the company at risk from regulatory changes and challenges, geopolitical uncertainties and foreign exchange risks.
Amazon is also involved in numerous technologies. The research and development of these can be very costly and carries significant risks.
Finally, Amazon can suffer from supply chain disruptions. Any disruption to supply chains, such as natural disasters, labour disputes or other logistic challenges can significantly impact operations.
Amazon and Split Stocks
Amazon also has a reputation for splitting stocks. A stock split is when a company increases the number of shares through the splitting of the shares.
Investors are then provided with shares with the equivalent value to their current investment. So those who had one share and there is a 2:1 split would get two shares. Therefore, investors don’t lose out on splits.
Stock splits can be very helpful for investors, as it allows them to sell some stocks to get some value out of the stock while retaining a stake in the company.
There have been three share splits at Amazon before 2000 – one in 1998 and two in 1999.
Another stock split was done in 2022, where there was a 20:1 split.
Frequently Asked Questions
Yes. You can invest in Amazon shares within the UK. You need to choose a trading platform that works within the UK and allows interaction with the New York Stock Exchange.
You should carefully consider what the goals of your investment are. Amazon is not well-known for paying dividends but its stocks do rise in value, generally, over time.
The closing price for an Amazon share in 1998 was $2.67. At the time of writing, a share was valued at $126. Therefore, investors could have made a return of 4,719% on their investment.
No, Amazon investments are not risk-free. Like any investment, there are risks associated with investing in Amazon, such as market volatility, economic factors and company-specific risks.
Investors should carefully evaluate the risks and consider their investment goals before investing in Amazon.
Some of the best trading platforms to invest in Amazon include popular options like E*TRADE, TD Ameritrade, Fidelity and Interactive Brokers.
These platforms offer robust features, user-friendly interfaces, and a wide range of investment options to consider when investing in Amazon.
Investing in Amazon can be worth the money for many investors. Amazon has shown strong growth and innovation over the years, and its dominant position in e-commerce and cloud computing has positioned it as a leader in the industry.
However, individual investors should conduct thorough research, consider their investment objectives, and assess the risk factors before making investment decisions.
Yes, you can buy Amazon stock in the UK. Amazon is listed on the NASDAQ stock exchange, which means it can be traded internationally, including in the UK.
UK investors can purchase Amazon shares through various brokerage accounts that provide access to international markets.
Generally, you need a brokerage account to buy Amazon shares. A brokerage account serves as an intermediary that allows you to buy and sell stocks.
It provides access to the stock market and facilitates the transaction process. However, some companies may offer direct stock purchase plans (DSPPs) that allow you to buy shares directly from the company, bypassing a brokerage account.
The minimum deposit required to invest in Amazon stocks depends on the brokerage firm or trading platform you choose.
Different brokers have varying requirements, and they may have different minimum deposit amounts.
It's important to research different brokerage options and their account minimums to find one that aligns with your investment budget.
Amazon shares have been a good long-term investment for many investors. The company has demonstrated consistent growth, driven by its strong business model, continuous innovation and expansion into new markets.
However, past performance is not indicative of future results, and there are no guarantees in the stock market.
Investors should consider their own risk tolerance, financial goals and conduct thorough research before making any investment decisions.
As of my knowledge cutoff in September 2021, Amazon did not pay a dividend. The company has historically focused on reinvesting its profits into expanding its business and driving further growth rather than paying dividends to shareholders.
However, dividend policies can change over time, so it's important to stay updated with the latest information regarding Amazon's dividend policy.
The future growth of Amazon stock is uncertain and subject to various factors. While Amazon has experienced remarkable growth in the past, future growth depends on the company's ability to maintain its competitive edge, adapt to evolving market conditions and continue innovating.
Additionally, external factors such as market trends, economic conditions, and regulatory changes can influence the stock's performance.
It's crucial for investors to regularly evaluate and monitor relevant information to make informed investment decisions regarding Amazon stock.
Final Thoughts
Amazon is a global leader in many niches. From being one of the largest eCommerce companies in the world to services in streaming, cloud computing and other technologies, Amazon is a massive part of everyday life for millions, or even billions.
Therefore, it makes it a great contender for investment. Above are the instructions to invest in Amazon UK shares.
But remember that any investment is at your own personal risk and you should only invest what you can afford to lose. But there is always the potential to earn from investing.
WikiJob does not provide tax, investment or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
