Sign InAmazon Stock Shows Bullish Trend Despite Overvaluation and Market Volatility
Summary
Amazon's stock closed at $133.56 on July 17, 2023, experiencing a slight decrease but still reflecting a bullish trend, with potential for growth as it is currently slightly undervalued, although high volatility and market sentiment should be considered, and investors should closely monitor upcoming earnings reports and the impact of the NASDAQ 100 Special Rebalancing.
Company Overview
Amazon.com, Inc. (NASDAQ: AMZN) is a multinational technology company focused on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is one of the world's most valuable companies and has become a significant influence in the global economy.
Recent Performance
On July 17, 2023, Amazon's stock closed at $133.56, reflecting a -0.83% decrease from the previous closing. This shift reiterates the usual volatility associated with market trading. The last recorded trading volume was 45.91 million shares, lower than the average of 62.87 million shares. At the close of the day, the company’s market capitalization stood at $1.37 trillion.
Price Analysis
The stock’s lowest value over the last trading day was $133.21, and the highest was $135.61. Considering a broader time frame, the stock has ranged between $81.43 (year low) and $146.57 (year high), indicating substantial volatility. At the current price level, the share price is closer to its year high, which could signal overvaluation.
Technical Analysis
Amazon's Relative Strength Index (RSI14) is 65, indicating the stock is nearing overbought territory. The 50-Day Moving Average of $121.71 and the 200-Day Moving Average of $104.64 are both below the current price, suggesting an ongoing bullish trend for Amazon's stock. The MACD, a 3-month trend-following momentum predictor, indicates a bullish trend at 2.05, suggesting upward price momentum.
Fundamental Analysis
Amazon's current PE (Price to Earnings) ratio is 318, significantly higher than the average PE ratio for the S&P 500, indicating that the stock may be overvalued. The company's EPS (Earnings Per Share) is $0.42, which is a fundamental basis for the PE ratio.
Analysts’ Prediction and Target Prices
Analysts predict a high target price of $270 and a low target of $97.78 for Amazon. The consensus target price is $161.55, which suggests a potential upside compared to the closing price on July 17.
News Analysis
Relevant news suggests a mixed sentiment. A notable upward climb of Amazon's shares by 60% since the beginning of the current year could indicate strong investor confidence. The strong engagement growth of Instagram, one of Amazon's ventures, suggests potential future growth. However, the NASDAQ 100 Special Rebalancing may impact the performance of the tech-heavy index and, in turn, Amazon.
DCF Analysis
Based on Discounted Cash Flow (DCF) analysis, a fundamental valuation method, the fair value of Amazon's stock stands at $138.85.
Conclusion – Stock Evaluation
Considering the analysis, Amazon stock displays a bullish technical trend, underlined by the overvaluation indicated by its PE ratio. Its current pricing is slightly lower than the DCF value, which provides some room for growth. However, high volatility and market sentiments should be considered. The upcoming earnings announcement on July 26, 2023, might also influence the stock'strajectory.
Therefore, Amazon stock could be categorized as a 'Hold.' Investors should closely monitor market updates, upcoming earning reports, and any potential impact from the NASDAQ 100 Special Rebalancing.
