- Amazon shares jumped ahead of the company’s fourth-quarter earnings release, which is expected after Thursday’s closing bell.
- Traders were expecting a larger-than-average move for the stock.
- Amazon shares have handily outperformed the broader market so far this year, though are down 16% since hitting an all-time last September.
- Goldman Sachs analysts said the stock’s underperformance comes amid some big-picture questions surrounding the company’s future growth.
- Watch Amazon trade live here.
Amazon is scheduled to report quarterly earnings after Thursday’s closing bell, with shares jumping 3% ahead of the release. After a disappointing earnings report last quarter that crushed the stock, shareholders may now be in for a slightly larger-than-usual market reaction.
Even as Amazon shares have easily outperformed the S&P 500 this year, the stock has fallen mightily – it’s in a technical correction, off 16% since hitting an all-time high last September.
Goldman Sachs analyst Heath Terry told clients in a note last week that its underperformance has centered around some big-picture questions about the company. Specifically, Terry referred to questions around the “trajectory of growth in the retail business, the sustainability of margins (particularly in AWS), and the scale of the advertising business.” The firm has a “buy” recommendation and price target of $US2,000.
As far as key levels on the chart go, Ari Wald, Oppenheimer’s head of technical analysis, told Business Insider that “near-term action is positive above $US1,600 support.” That level – around 7% below where Amazon was trading on Thursday, at $US1,715.75 a share – is the stock’s 50-day moving average. Oppenheimer carries a “buy” rating.
More granularly, Wald has observed an intermediate trading range below $US1,780 resistance – the stock’s peak in November and December.
“Aside from an additional few months of sideways consolidation, we generally expect a premium to be placed on high-growth companies in a low-growth world making stocks like AMZN prime candidates to lead the S&P 500’s secular advance over the coming years,” he wrote in an email.
Traders are expecting to see a move of 6% – in either direction – compared to the stock’s average 3.7% move over the prior four reports. That’s according to an analysis from Susquehanna Financial Group’s derivatives strategists, who noted the average move over the last eight quarters has been 4.3% in either direction.
Wall Street was looking for adjusted earnings per share of $US7.90 on revenue of $US71.9 billion, according to analysts surveyed by Bloomberg.
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