AMZN: Post-Earnings analysis - How cheap is it?Hello traders and investors! Let’s study AMZN today!
The stock was crushed after earnings, and it is not reacting. So far, we don’t have any bullish structure around that could reverse this bearish momentum.
AMZN did a Monster Gap after earnings and it lost 3 supports at once: The 21 ema; the 3,552.80 (previous resistance); and the 3,394.18 (previous support). Now it is just heading to the next support, at the red line ($ 3,127.37).
Since we are far from the next support (we would need a drop of more than 4% to hit there), it is possible to see a good reaction before that, maybe around the 21 ema in the weekly chart :
However, it is true that despite the earnings, AMZN is cheaper than ever. When we look at its Price/Earnings ratio, now it is at 57, the lowest point in history (when positive, of course). Its diluted EPS is also incredible, more than 3x Q1 2020. All of this means that AMZN is getting cheaper, not because of the recent crash, which was nearly insignificant, but because the company is creating value.
What’s more, AMZN has a quite weird business model, as it is almost everyone’s rival. Despite the common belief that AMZN is just a tech retailer company, this is not entirely true. Usually people believe that AMZN’s rivals are COST or WMT, but AWS is the main source of income for AMZN, so technically, GOOG and MSFT are its main rivals.
- AMZN Operating income in North America: $ 3,147 million;
- AWS Operating income: $ 4,193 million;
- AMZN had a loss internationally.
All of this reflects on the charts. The relationship between AMZN, COST and WMT is almost nonexistent, despite being in the retail sector too.
It is interesting to notice that AMZN is still one of the most expensive FAANGs, being FB the cheapest, in my view. Nevertheless, the company is growing nicely, and given its nature, maybe it’ll never be among the cheapest stocks.
Amazon is a great company, and a crash like this might be just an opportunity, but ultimately, the charts will give us a good entry point, as usual. Let’s calmly wait for a technical entry point.
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