FAA Gives Amazon (NASDAQ:AMZN) Green Light to Fly New Delivery Drones
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FAA Gives Amazon (NASDAQ:AMZN) Green Light to Fly New Delivery Drones

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This development is the latest step toward Amazon launching its futuristic package delivery service.

Amazon (AMZN) is rising today after the company received the green light from the Federal Flight Administration (FAA) to start flying new delivery drones beyond pilots’ sightlines. This development is the latest step toward Amazon launching its futuristic package delivery service. CNBC reports that this new model, the MK30, is smaller and quieter than Amazon’s previous delivery drone and comes with twice its range.

What’s Happening with Amazon Stock?

Amazon stock is up 1.5% today, though it recently lost some momentum. This is likely due to the fact that the U.S. Federal Energy Regulatory Commission (FERC) just rejected Amazon’s nuclear power deal with Talen Energy (TLN). That said, Amazon has performed well this week and is still up almost 5% for the past five days despite this setback.

Thankfully for investors, Amazon’s green light from the FAA could help boost shares in the long term. Being able to conduct long distance flights with the MK30 and fly it beyond the sightline of pilots is likely to help Amazon increase its delivery capacity. The Amazon Prime Air program has experienced some hurdles, but this regulatory approval indicates that the company is making progress toward it.

Amazon released a statement today confirming that customers in the West Valley Phoenix Metro Area of Arizona who live near the delivery site and “purchase an eligible item weighing 5 pounds or less” can expect a drone delivery in less than one hour. If these test flights go well, Amazon will likely take steps to expand the program and begin drone deliveries to larger markets.

Is Amazon Stock a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 44 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 42% rally in its share price over the past year, the average AMZN price target of $237.10 per share implies 19% upside potential.

See more AMZN stock analyst ratings

Amazon’s drone delivery update may not be a significant growth catalyst in the short term. The new phase of the program will need time to develop before it can expand beyond Arizona. But if it does, it could be the beginning of a new phase for Amazon, allowing it to deliver packages even faster.

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