Why Amazon's stock drop?
$Amazon (AMZN.US)$ Amazon's stock dropped recently due to a downgrade from Wells Fargo analyst Ken Gawrelski, who changed his rating from overweight to equal weight and lowered his price target to $183.¹ This move was likely influenced by concerns about Amazon's growth prospects, particularly in three key areas:
- *Advertising Business*: Gawrelski worries that third-party merchants may spend less on advertising, impacting Amazon's high-margin ad business.
- *Fulfillment by Amazon (FBA)*: Competition from Walmart could limit Amazon's ability to increase FBA fees, affecting its logistics business.
- *Project Kuiper*: The multibillion-dollar satellite internet project poses significant financial risks and may not yield substantial returns.
Additionally, Gawrelski notes that Amazon's operating profit margin is expected to flatten, which could impact its stock price. With Amazon trading at over 40 times its trailing free cash flow and 44 times trailing earnings, it needs to demonstrate strong, sustainable growth to justify its valuation.
However, it's worth noting that some analysts still view Amazon as a buying opportunity, citing its services business, rapid margin expansion, and potential upside from artificial intelligence.² Would you like more information on Amazon's stock performance or its business prospects?
- *Advertising Business*: Gawrelski worries that third-party merchants may spend less on advertising, impacting Amazon's high-margin ad business.
- *Fulfillment by Amazon (FBA)*: Competition from Walmart could limit Amazon's ability to increase FBA fees, affecting its logistics business.
- *Project Kuiper*: The multibillion-dollar satellite internet project poses significant financial risks and may not yield substantial returns.
Additionally, Gawrelski notes that Amazon's operating profit margin is expected to flatten, which could impact its stock price. With Amazon trading at over 40 times its trailing free cash flow and 44 times trailing earnings, it needs to demonstrate strong, sustainable growth to justify its valuation.
However, it's worth noting that some analysts still view Amazon as a buying opportunity, citing its services business, rapid margin expansion, and potential upside from artificial intelligence.² Would you like more information on Amazon's stock performance or its business prospects?
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Juhil Patel : I do not think that's why it dropped, he had hold rating since November 1 so if it was due to that Chang8from overweight to equal weight, AMZN should have dropped last week when he said hold...this is tooo late reaction for the news (I don't think that's the reason)
and other than this 1 analyst, all high rated analysts have it on strong buy with significant upside PT!!!! just my thoughts, I might be wrong
Space Dust : blackrock needed cash and is shaving across its portfolio.? something like that..
RandomTrader_ : That is an old news. It has already previously dropped when WF announced its revised price, so the current drop is not because of that price revision. It’s just part of a general broader market selloff