Amazon.com Inc (NASDAQ:AMZN) stock hits $1000 and is gaining momentum as technicals turn bullish.
After rallying over 40% for the year, shares of eCommerce giant, Amazon.com Inc (NASDAQ:AMZN) had declined by over 10%, following its second quarter earnings. Amazon stock had hit the all-time high of $1083 and CEO Jeff Bezos had become the richest man in the world for few hours before a disappointing report spoilt their party. The Seattle-based eCommerce giant, while delivering a beat on revenues, had missed heavily on the earnings front. Amazon's earnings tanked 78% YoY and guidance was not exactly encouraging. Further, geopolitical tensions and valuation concerns also played part leading to over 10% correction in Amazon stock. However, Amazon stock is bouncing back. It hit the psychologically important $1000 mark again in yesterday's trading session, before closing the day few cents lower.
Technical analysis indicates bullish momentum for Amazon stock.
Amazon stock is up more than five percent in the last two weeks and is gaining momentum. Amazon.com Inc stock made a bullish crossover above the 50-day moving average. As can be seen in Amazon's technical chart, the 50-day moving average has been providing strong resistance to the stock over the past month. Earlier, Amazon stock had crossed above the 100-day moving average line, a couple of days ago. The bullish crossovers indicate that the rally in Amazon stock is still strong and the stock is likely to continue upwards. Further, complementing the bullish crossover, MACD also turned bullish, crossing the center line from below. All in all, Amazon stock technical analysis indicates that the stock is headed higher from here.
Whole Foods Acquisition is showing results.
The news from Amazon's business front is also good. A recent report from Bloomberg indicates that Amazon is showing healthy progress after its acquisition of Whole Foods. Both Amazon.com Inc and Whole Foods are showing strong sales. After the acquisition, Amazon had immediately put about 2,000 items from the Whole Foods 365 Everyday Value brand on its eCommerce platform for sale and almost all of the most-popular items sold-out like hot cakes. Web sales of Whole Foods branded products totaled about $500,000 in the first week, according to One Click Retail’s estimate. Amazon has struggled with online grocery because shoppers were not confident of the products they were buying. People tend to be more careful about what they eat. But given the trust Whole Foods’ brand enjoys, Amazon should not find it difficult to grow its online grocery business. With Whole Food's branding, consumers feel that they don’t need to touch and smell the produce.
A similar uptick in sales was seen in Whole Foods' stores. Immeadetly after the acquisition, Amazon has slashed prices of products by as much as 43 percent on a range of items. This has boosted customer traffic by 25 percent. At stores in Chicago, 35 percent more shoppers visited Whole Foods stores, analysis from research firm Foursquare found. However, it is still too early to declare the Amazon Whole Food's marriage successful.
Amazon is also expanding its footprint in emerging markets like Mexico and India. According to reports, to spearhead its effort in Mexico, Amazon.com Inc is preparing to open a 1 million square-foot warehouse near Mexico City. The facility is likely to triple Amazon's distribution space in Mexico and help bolster Amazon's prospect in Mexico, home to 120 million potential customers. Online shopping comprises just 3 percent of all retail sales in Mexico, leaving a huge potential for growth. Amazon posted $253 million in sales in Mexico last year, more than double the year before, according to market research firm Euromonitor International.
Amazon also continues to invest in India, which it believes could one day become its second largest geographic market after the United States. Amazon India announced the formal launch of its fashion imaging studio, BLINK, in Gurgaon, a city close to New Delhi, on Wednesday. This is Amazon’s third such facility in the world—after London and New York. The studio contains 16 photography bays, a ramp and a presentation area along with enclosed workspaces for Amazon teams and fashion sellers to collaborate on creative content. This investment shows Amazon’s increased focus on fashion. Online fashion e-commerce in India is expected to go from $7-9 billion currently to $30 billion in 2020, a recent report by Boston Consulting Group and Facebook said.
Analysts remain bullish on Amazon stock.
On the whole, Amazon stock is all set to break out above the $1000 mark in the coming trading sessions. Analysts continue to remain bullish on the eCommerce giant. Of the 46 analysts covering Amazon, 40 have a "buy" recommendation on the stock, and four have recommended a "hold." The median price target for Amazon stock is $1,150 indicating 15% upside. There are analysts who believe that Amazon stock is still a multi bagger. MKM Partners analyst Rob Sanderson said that Amazon.com, Inc. could be worth $1.6 trillion in less a decade, more than three times its current market cap of $480 billion.
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