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For years, the bear case was heard for Amazon’s inventors (NASDAQ: AMZN). It is exaggerated. It does not provide money. It is exaggerated. Oh, wait, I said it before. (Well, welcome to around 2013). In any case, we’ve heard for years that AMZN’s inventory is about to implode.
Until not. And not only has Amazon not imploded, but it has a giant.
The company now has a market capitalization of $1. 76 billion, Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) in total size.
The secular expansion of e-commerce has driven its expansion over the years, but so have its other companies. Can you continue?
We already know that e-commerce has allowed Amazon’s online retail to flourish, but its other activities are the explanation for why the company has been able to thrive: Amazon Web Services (its cloud business), its advertising unit, and its entertainment unit. .
It’s true that its entertainment unit integrates well with Amazon Prime, which blends with its e-commerce unit, but Prime allows for a great source of money for the company, such as joining Costco (NASDAQ: COST), while creating a strong online divide.
All those catalysts have allowed Amazon to win and thus make the stock soar, although frustrating, the inventory has been consolidating for almost a year.
This allowed inventory to digest its earnings in the early part of 2020 and allowed its valuation to decline. This was “corrected” without much hassle and gave investors time to cash in a position. In the future, Amazon deserves to continue to explode.
Consensus expectations expect earnings expansion of 27% this year and an 18% expansion in 2023. Regardless of whether sales grew 38% in 2020. On the earnings front, analysts expect an expansion of 33% this year and around 30% next year. year.
What are those estimates like and, more importantly, are they too conservative?
Over the past 4 quarters, the magnitude of the beats has been staggering. In this stretch, analysts expected earnings of $25. 81 consistent with a consistent percentage of earnings of $398. 4 billion.
So, collectively, Amazon has more than doubled profit expectations while generating more than $20 billion in cash beyond expectations. In that sense, I think analysts are too conservative.
I said I was going to deal with the technical facets of the AMZN inventory and we’re there now. Corrections tend to stick to one of two paths: either in time or in price.
In other words, after a strong advance, stocks tend to revel in a potentially giant drop (price correction) or have a trend to the industry sideways for a while and to rest (correction over time).
For example, expansion stocks have recently adjusted to prices, while Amazon and Apple have corrected it over time.
Just watch as stocks soared above the March 2020 lows, and then Amazon settled into a trading diversity between $2,900 and $3,450.
The 50-week moving average has been a fair point of help in this period, causing AMZN’s inventory to recover slightly higher.
Now, above the resistance, Amazon still has a major hurdle, namely the $3,550 area. Twice now, this point has been a primary resistance. If stocks can’t beat it, I’d like to see the $3,350 resistance turn into support. as well as the 10-week moving average.
A breakout of more than $3,550 can open the door to a boost toward $3,950 to $4,000.
There are reports of breaking FAANG, but they have been reported breaking FAANG. For Amazon in particular, the company has so many moving parts that a breakup can even create value, if it happens.
For all purposes, the company remains an engine of growth, its valuation has fallen over the years and its chart is much better.
For now, I’m a bull with the actions of AMZN, a bear.
At the time of publication, Bret Kenwell had (directly or indirectly) no position on the values discussed in this article. The perspectives expressed in this article are those of the author, the subject of investorplace’s publication Guidelines. com.
The publication of Amazon Stock, even though everything results in conditions to go out and succeed in new heights, gave the first impression on InvestorPlace.