Amazon.com is struggling to recover from lackluster results last week, leaving it a touch away from the longest streak of daily losses in more than three years.
The e-commerce and cloud-computing giant’s shares are lagging behind most of its megacap peers and the market overall this year. Shares fell 3.1% on Thursday in their seventh straight daily decline, the longest such streak for the stock since an eight-day rout that ended in August 2019. The Nasdaq 100 Index fell 2% on Thursday.
The stock has lost a quarter of its value over the seven-day drop, with nearly $320 billion in market capitalisation erased as it declines to its lowest level since March 2020.
“I feel like it’s just now that people are really starting to question the bull thesis on Amazon,” said Stefan Slowinski, an analyst at BNP Paribas Exane who is the only analyst tracked by Bloomberg who recommends selling. He sees no “quick fix” for the stock and cited the company’s Amazon Web Services cloud business as a particular concern.
Yet, even as its earnings multiple plummets to 2010 levels, investors are still finding the price tag hard to justify given it projected the slowest holiday-quarter growth in its history and it reported muted growth in its cloud business.
While technology and internet stocks have come under broad pressure this year, as aggressive moves by the Federal Reserve to combat inflation weighs on multiples, Amazon has stood out as an underperformer.
“I don’t think anything is broken at Amazon, but the valuation is on the high side and its growth is modestly less impressive than it has been,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, who has been trimming his position in the stock.
What’s more, Amazon said on Thursday it’s pausing “new incremental” hiring across its corporate workforce as the world’s largest online retailer prepares to weather a slower economy.
Still, the stock remains a favorite among retail investors, who poured into the shares following its results last week. It is also a near-unanimous favourite among the analysts covering the stock.
“Stocks rarely bottom when there’s only one seller in the market,” added Slowinski. “And so, it’s hard to see that happening now before you get more capitulation.”
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