Key insights
- Amazon's transition of its small business credit cards to U.S. Bank and Mastercard signals continued expansion into business services. While the direct impact on AMZN stock is limited, it reflects Amazon's strategy to deepen relationships with small businesses, a growing segment with over $35 billion in annualized gross sales. The move could incrementally boost Amazon's revenue and reinforces its competitive position.
SEATTLE - Amazon (NASDAQ:AMZN) announced Monday it will transition its small business credit cards to U.S. Bank (NYSE:USB) and the Mastercard (NYSE:MA) network, launching two new cards this spring. The move comes as the $2.16 trillion retail giant continues expanding its business services ecosystem.
The Prime Business Card will offer Prime members 5% back on Amazon purchases, while the Amazon Business Card will provide 3% back for non-Prime members, according to a press release statement. Both cards will feature rewards for purchases outside Amazon, flexible credit terms, and no annual fees. After reaching $150,000 in combined annual net purchases, cardholders will earn 1% back on these categories.Amazon trades at a P/E ratio of 27.94 and currently appears undervalued according to InvestingPro analysis, placing it among opportunities on the platform’s most undervalued stocks list. Investors can access detailed valuation metrics and exclusive Pro Research Reports for deeper analysis.
The cards will include purchasing and spend management tools designed for small business customers. Additional benefits will be announced in coming months.
"Small businesses told us they wanted more ways to earn rewards wherever they shop and better tools to manage cash flow," said Tai Koottatep, director and general manager of Worldwide B2B Payments & Lending at Amazon.
Current Amazon Business American Express cardholders can continue using their existing cards and will receive communication from American Express and U.S. Bank regarding the transition.
U.S. Bank serves more than 1.4 million small business clients and is one of the largest card issuers in the United States. Mastercard provides acceptance at hundreds of millions of locations globally.
Amazon Business, launched in the U.S. in 2015, reported over $35 billion in annualized gross sales and serves more than eight million organizations globally, excluding emerging geographies. This represents a growing segment of Amazon’s total revenue, which reached $716.9 billion over the last twelve months with 12.4% year-over-year growth. The service operates in 11 countries including the United States, United Kingdom, Germany, Japan, and India.
In other recent news, Amazon.com Inc. has secured a significant agreement with Delta Air Lines Inc. for its Leo satellite service to provide in-flight Wi-Fi, marking a competitive win against SpaceX’s Starlink. The service will be installed on 500 Delta aircraft starting in 2028, initially focusing on domestic routes with Boeing and Airbus narrow-body planes. Meanwhile, Amazon faced a cyberattack on the European Commission’s cloud account, affecting its Amazon Web Services before being blocked, prompting an internal investigation to assess the breach’s impact.
In the realm of analyst ratings, Tigress Financial Partners raised its price target on Amazon to $315, maintaining a Buy rating, citing the company’s AI advancements and robust revenue streams. JPMorgan also increased its price target to $280, reflecting strong demand for AWS and capacity expansion, despite considering factors like foreign exchange rates and fuel prices. Conversely, Wolfe Research lowered its target to $245, maintaining an Outperform rating, primarily due to anticipated fuel cost pressures affecting Amazon’s operating income projections. These developments highlight Amazon’s strategic moves and the varying perspectives of financial analysts on its future performance.
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