Amazon: Not Worth Buying Here

Summary:

  • Amazon stock remains nearly 50% below its 2022 highs. So we revisited our valuation metrics and assessed why investors aren’t too keen to return aggressively.
  • While AWS and advertising are expected to help Amazon recover its profitability growth, its top-line growth is expected to be well below its pre-COVID metrics.
  • As such, valuing AMZN as if it was still a high-growth company likely isn’t appropriate.
  • We think the market is right, and we don’t think we can still justify our Buy rating on AMZN at the current price levels. However, a deeper pullback should help.
Exterior view of the Amazon Logistics delivery agency in Velizy-Villacoublay, France

HJBC

Amazon (NASDAQ:AMZN) has outperformed its consumer discretionary sector (XLY) peers since its December lows as investors returned to risk-on stocks. However, AMZN formed a bull trap or false upside breakout in early February.

We also discussed that bull trap in


Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMZN, GOOGL, META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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