Amazon Running in Place After Blowout Quarter
Amazon.com Inc. (AMZN) is trading lower on Wednesday despite beating Q4 2020 top and bottom line estimates by wide margins. The e-commerce juggernaut earned $14.09 per-share during the quarter, better than $7.15 per-share estimates, while revenue rose a staggering 43.6% year-over-year to $125.6 billion, beating consensus by nearly $6 billion. Jeff Bezos announced his departure as CEO during the release, replaced by current head of Amazon Web Services Andy Jassy.
Your capital is at risk
Q4 Blowout Results
Operating income rose 77% year-over-year to $6.87 billion vs. $1.0 to $4.6 billion guidance. Amazon Web Services (cloud computing) posted another strong quarter, growing 28% year-over-year to $12.74 billion. CEO Bezos capped off the blowout quarterly report by issuing upside Q1 guidance, now expecting revenue of $100 to $106 billion vs. $95.5 billion prior expectations while looking for operating income of $3.0 to $6.5 billion.
Susquehanna raised the firm’s price target to a Street-high $5,200 after the news, commenting, “Business trends remain strong and should continue to do so in 2021. Paid units growth was extremely strong again at 47% year-over-year, demonstrating the accelerating shift to e-commerce. The 1Q guide was also nicely above expectations for revenue and profitability, showing no signs of slowing down after a huge holiday season.”
Wall Street and Technical Outlook
Wall Street consensus now stands at a ‘Strong Buy’ rating, based upon 41 ‘Buy’, 7 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $3,048 to a Street-high $5,200 while the stock opened Wednesday’s U.S. session more than $600 below the median $4,100 target. This stark under-performance, compared to price targets, suggests that investors still view Amazon as ‘fully-valued’.
The stock broke out above 2018 resistance at 2,550 in April 2020 and rallied to an all-time high at 3,552 in September. Price action then eased into a symmetrical triangle pattern that remains in force, more than five-months later. The blowout fourth quarter report has barely moved the price needle, suggesting that Amazon remains extremely overbought after 2020’s 76% return, even though its already spent months working off technical extremes.
For a look at all of today’s economic events, check out our economic calendar.
Disclosure: the author held no positions in aforementioned securities at the time of publication.