February 1, 2023

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The Amazon company is beginning its economic fall

2 min read

The fall in Amazon shares we’ve seen could be just the beginning, a veteran tech analyst has warned, especially as concerns soar over the costs facing the tech giant and the growth potential of its top line. of business, Jefferies technology analyst Brent Thill said in a note to clients, “In our mega-cap coverage, we believe Amazon is in the least advantageous position due to its exposure to headwinds that have generated inflationary costs and have the potential capacity to decelerate consumption”. He added “We show that a bearish scenario of $60 billion in earnings before interest, taxes, depreciation and amortization at a minimum multiple of 9 times would produce a stock of $51, implying ~45% downside compared to with current levels.

The flow of news about Amazon has fueled a bear market in recent months.

Thill, who reiterated a long-term Overweight (Buy Equivalent) rating on Amazon, citing its leading position in e-commerce, added that “investors need to be confident that operating income estimates have bottomed out before stocks can mark a turning point.”

For the third quarter, the company missed analysts’ estimates as growth in its main line of business continued to cool and costs remained elevated. For the fourth quarter, Amazon estimated revenue of between $140 and $144 billion, instead of the $155 billion that analysts had projected.

Shares fell nearly 10% the next day. Amazon began laying off 10,000 workers in an effort to rein in its cost structure earlier this month.

However, the shares have continued to fall: in November they are down another 10%.

The macro economy is now starting to affect Amazon’s fundamental analysis and we are cutting estimates by 20-30% on 2023 and 2024 operating income.

Published by Iraic.info, news and information agency.

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