Amazon’s $267b summer wipeout tests Wall Street

Bloomberg

It’s rare to see just about everyone on Wall Street agree on something, but that’s the case when it comes to Amazon.com.
Every single analyst who rates the stock — all 55 of them — recommends clients buy it, according to Bloomberg data. Active fund managers “are even more overweight” the name
now than they were a year ago, per a Bank of America report on August 10.
Yet that ubiquitous bullishness is being put to the test as last month’s unexpectedly weak sales forecast complicates the company’s growth narrative. In a summer when Amazon co-founder Jeff Bezos blasted off into space, the company’s stock has fallen back to Earth.
The shares have tumbled about 15% from a peak in early July, erasing about $267 billion in value, as investors question its prospects on the other side of a pandemic that turbocharged demand for its services.
Shares fell 0.4% this week and the stock closed below its 200-day moving average for the first time since June, and it is now lower than where it started the year. “The market rewards growth and it doesn’t look like Amazon has any catalysts for increased spending of its users or picking up more users,” Kim Forrest, founder and chief investment officer of Bokeh Capital Advisors, said in an interview.
The company’s reported plan to open several large department-store-like locations in the US doesn’t appear to be the news that will turn the stock around. The Wall Street Journal’s report was based on unnamed people familiar with the matter.
Amazon’s poor performance stands out among US companies valued at more than $1 trillion, as well as the market as a whole. Apple Inc, Microsoft Corp, and Alphabet Inc all hit records this week, as did the S&P 500 Index. Facebook Inc is about 5% below its own record close.
The e-commerce company’s disappointing outlook last month came along with revenue that missed estimates for the first quarter since 2018. Analysts have pared back their expectations in the wake of the report. For Amazon’s current quarter, the average earnings estimate has dropped about 16.5% over the past month, according to data compiled by Bloomberg. The revenue consensus has fallen by nearly $6.5 billion, or 5.5%, over the same period.
Yet the shares do not yet look technically oversold, said Chris Verrone, partner and head of technical and macro research at Strategas Research Partners.