In just over a year, the share price of Amazon, the e-commerce juggernaut, has fallen by over 50%. The crash from over $188 to under $85 a share erased over a trillion dollars from the company’s market cap. Apparently, after having extrapolated the pandemic era revenue boost into the distant future, investors felt disappointed when things started getting back to normal.
But in reality, Amazon is just as dominating in both e-commerce and the cloud now as it was before and during the pandemic. This means the sharp drop in the stock might be a blessing in disguise. 2022 sales are expected to rise ~9% to $511B and then add another 10% on top of that in 2023. The company’s earnings power suggests the stock might be a bargain already. Not to mention that the Elliott Wave chart below indicates that a bottom is near.
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Amazon ‘s daily chart reveals that the selloff from $188.65 which began in July, 2021, is clearly corrective. It can be seen as a W-X-Y corrective combination between a flat correction in wave W and a simple zigzag in wave Y. Connecting the two is wave X, which is marked as an expanding flat retracement. The sub-waves of all three are labeled (a)-(b)-(c) each. The impulsive structure of (a) of W, (c) of X and (a) and (c) of Y are visible, as well.
There’s an Opportunity in Amazon ‘s Crisis
If this count is correct, Amazon is searching for a bottom already. Perhaps due to the initial overvaluation, revenue growth failed to translate into investment returns over the past year and a half. That’s likely to change soon as the Big Tech bear market finally comes to a close. In the long run, the bulls should have no problems reaching targets above the $200 mark. With that in mind, we’ve added AMZN stock and 16 others to The EWM Interactive Stock Portfolio.
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