A trillion dollar giant Amazon has been upsetting investors with poor earning reports since July 2021 and its market price has already dropped by nearly 40%. But is the price fair now to buy the dip or should we expect deeper and longer correction?
Fundamental indicators::
Revenue and Profits - consistent growth for the past 10 years, however, it is slowing down since 2021
Profit margin - just 7%, considerably lower than the rest of FANGMAN
P/E - still overwhelmingly overpriced with 54x ratio
Liabilities - no problems with debt
Technical Analysis (Elliott Waves):
Since IPO and the first deep correction in 2001 the share price has been accelerating and developing in a series of first waves
The first considerable correction of wave 4 can be observed between September 2018 and March 2020 in the shape of a Running Flat
And since the historic high $3773 culminating in wave 3 there has been next corrective wave 4 developing
Using the Fibonacci retracement levels from the high, the potential price zone where the correction may find support is between $1880 - $1660, representing 0.786x of Wave 3 and 1.618x of wave A
Considering that the previous wave 4 has lasted for 560 days, the one we are observing now is most likely to last even longer, at least until August 2023
And given that the correction is quite deep it is also likely that correction may take shape of Triple Three pattern
Given all the above points the price range $1880-$1660 might be good for some purchases. However, considering the risks of recession and lengthy correction in the market - is it worth investing in Amazon now?
Please share your thoughts in the comments and like this idea if you agree wit it. Also let me know if you would like to see other stocks, indices or Forex pairs analysed using Elliott Waves.
Thanks
This is an update to the previous idea following the latest development in Amazon
Let's not forget that Amazon will have a 20:1 stock split by the end of May 2022. The stock will be cheap enough for retail investors, and based on historical stock splits, it has performed quite well.
vitalalyt
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@checkmate0388, yes, interesting to see how it plays out this time
4baf2fb7559242d7a01e34fca9796a
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What’s your level on (4)
DrHogs333
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Thank you. Are you suggesting there may be a bit more movement to the upside before further correction to the 1880 - 1660 zone?
vitalalyt
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@DrHogs333, 50:50;) there are different options counting impulse in wave C, one of them is that it goes down without any bounce, i think it will be more clear on monday