Amazon loses $ 253 billion, tests Wall Street love

It’s unusual for almost everyone on Wall Street to agree on something, but that’s the case when it comes to Amazon.com Inc. Every analyst who rates stocks recommends clients buy them, according to Bloomberg data. Active fund managers are “even more overweight” on the name now than they were a year ago, according to an Aug. 10 Bank of America report.

However, that ubiquitous optimism is being put to the test as last month’s surprisingly weak sales forecast complicates the company’s growth story. The summer Amazon co-founder Jeff Bezos flew into space, the company’s shares fell almost 14% from a peak in early July, wiping out about $ 253 billion in value.

“The market rewards growth and it doesn’t look like Amazon has a catalyst to increase user spending or attract more users,” said Kim Forrest, founder and chief investment officer of Bokeh Capital Advisors, in an interview with Bloomberg Television.

The company’s announced plan to open several department store-like department stores in the United States does not appear to be the news that will mark a turnaround in inventory. The Wall Street Journal report was based on anonymous people familiar with the case.

Amazon’s poor performance is evident among US companies valued at over $ 1,000 billion, as well as the market as a whole. Apple Inc., Microsoft Corp. and Alphabet Inc. all hit record highs this week, as did the S&P 500 Index. Facebook Inc. is about 5% below its own record.

The disappointing outlook for the e-commerce company last month was accompanied by revenue that fell below first-quarter estimates since 2018. Analysts lowered their expectations in the wake of the report. For Amazon’s current quarter, average profit estimates have fallen about 16.5% over the past month, according to data compiled by Bloomberg. Consensus revenue fell nearly $ 6.5 billion, or 5.5%, over the same period.

However, the stock does not appear to be technically oversold yet, said Chris Verrone, partner and head of macro and technical research at Strategas Research Partners, who believes more caution is required. And the unanimous optimism in the face of the action is in itself a red flag for him.