AMZN.US shares fell to a 52-week low earlier this year on the back of a sharp decline in risk appetite, rising benchmark interest rates and concerns about economic growth, Zhitong Financial APP learned. Recently, however, share prices have risen sharply, up more than 40 per cent from the phased low set in May.
The recent rally in US stocks came as investors began to bet that the Fed could rein in inflation without triggering a recession after Federal Reserve Chairman Powell gave some signs of optimism. At the same time, Amazon.Com Inc also benefited from good quarterly results, bringing the stock to its highest level since April. Given the recent surge in Amazon.Com Inc's share price, is the company worth buying even in the face of economic uncertainty?
Performance and stock prices regain their growth trajectory
Last week, Amazon.Com Inc announced its second-quarter results, and the online retailer is actively responding to the current environment. Despite huge losses caused by one-time charges, the company's revenue growth was better than analysts had expected. Most of the losses included $3.9 billion in fees related to the company's stake in electric car company Rivian (RIVN.US), a start-up that lost about 65 per cent of its value in 2022. But in terms of revenue data, Amazon.Com Inc's total revenue rose 7 per cent from last year to $121.2 billion, more than $2 billion higher than analysts had expected.
The leap was mainly led by its AWS cloud service platform, where sales of its AWS cloud platform increased by 33%, and Amazon.Com Inc's unexpectedly strong performance in advertising, with revenue from Q2 advertising services rising 14% year-on-year to $8.76 billion.
Amazon.Com Inc's share price soared after the release of the quarterly report, recording a double-digit increase the following trading day. Shares in the company founded by Jeff Bezos fell more than 46 per cent from an all-time high of $188.65 in July 2021 to a 52-week low of $101.260 in May.
The stock has been rising since it hit this phased low. This is in line with the general rebound in the overall market, as can be seen in the recent surge in the share prices of other large technology stocks. Since mid-June, Tesla, Inc. (TSLA.US) and Apple Inc (AAPL.US) shares have risen 39 per cent and 24 per cent respectively. The S & P 500 as a whole has risen 11 per cent since mid-June.
What do analysts think?
Wall Street analysts are generally optimistic about the future trend of Amazon.Com Inc's share price. Of the 52 analyst ratings compiled by Seeking Alpha, the stock received only one "sell" rating and one "hold" rating. This means that 50 other analysts (96 per cent of the total) have optimistic expectations, including 36 "strong buy" ratings and 14 "buy" ratings.
In terms of the target share price, the average target price of Wall Street analysts collected by Seeking Alpha is $174.02, with a maximum target price of $270. both are much higher than Amazon.Com Inc's closing price of $142.570 yesterday.
The quantitative measurement system to measure the comprehensive performance of Amazon.Com Inc's share price provides a more complex point of view. The Seeking Alpha quantitative rating system rated the stock as "hold". Despite the company's high scores for profitability and growth momentum, the system has sent a clear red flag in its valuation.
Specifically, the quantitative rating shows that the profitability of AMZN is A, the momentum is A, and the growth is B. In terms of valuation, however, the Seeking Alpha quantitative rating system gives a frustrating F rating.