While tech heavyweights like Apple, Alphabet and Microsoft reported a lackluster second quarter, Amazon turned the tide with results that beat analysts’ expectations.
Has this restored confidence in the company whose share price fell by 45% between November 2021 and June 2022? Read on to learn more about Amazon’s earnings release and the different ways to trade the stock.
|Stock :||Amazon Inc.|
|Symbol on the Invest.MT5 account:||AMZN|
|Potential trade date:||August 9, 2022|
|Time horizon:||1 – 6 months|
|Take Profit Level:||$176|
|Position size (Invest.MT5 account):||Max 5%|
- The Invest.MT5 account lets you buy real stocks on 15 of the world’s largest stock exchanges.
Any trading activity is highly risky and you can lose more than you risk on one trade. Never invest more than you can afford to lose, as some trades are losers and others are winners. Start small to understand your own level of risk tolerance and practice first on a demo account to gain knowledge before trading.
Amazon Second Quarter Earnings Report
In its latest earnings report, Amazon posted better-than-expected revenue for the second quarter and presented an optimistic outlook for the coming quarters.
Indeed, the turnover amounted to 121.23 billion dollars, against 119.09 billion dollars expected. Amazon Web Services, the company’s cloud offering, posted revenue of $19.7 billion versus $19.56 billion expected. Ad revenue hit $8.76 billion, versus $8.56 billion forecast.
Overall, revenue growth of 7% in the second quarter exceeded analysts’ expectations. Amazon also said it expects third-quarter revenue of $125 billion to $130 billion. This represents growth of 13-17%, which is well above analysts’ expectations.
In Amazon’s earnings release, CEO Andy Jassy said, “Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on the more controllable costs we benchmarked last year. quarter, including improving the productivity of our execution network.”
Jassy also said, “We’re seeing revenue acceleration as we continue to improve Prime for members, both by investing in faster shipping speeds and adding unique benefits like free shipping on Grubhub during one year, exclusive access to NFL Thursday Night Football games starting September 15, and the release of the highly anticipated The Lord of the Rings series on September 2.”
Amazon Acquires Robotics Company iRobot
Last week, Amazon announced the purchase of iRobot, known for its Roomba robot vacuums. The acquisition price is 20% above the market price, but remains more than 70% below the record iRobot share price.
While these are products that can be added to its lineup instantly, the acquisition underscores that Amazon’s next big thing could come in robotics. Essentially, this acquisition could have been made for the robotics company’s expertise.
This could bring Amazon one step closer to creating a complete, fully automated line of smart home products. In recent years, Amazon has acquired a smart doorbell company, a home security company, and a home Wi-Fi company.
No indication of this acquisition has yet been provided, but Amazon may come up with some very promising new products in the future. However, as the market is evaluating this acquisition, the share price could fall if no announcement is made soon.
Another factor to consider is the fact that most of the other big tech companies have reported a bleaker outlook. This type of sentiment could therefore weigh on all technology stocks, including Amazon.
What Do Analysts Predict for Amazon Stock?
According to analysts polled by TipRanks for a forecast of Amazon stock over the past 3 months, there are currently 39 buy ratings, 1 hold rating, and 0 sell ratings on the stock. The highest price target for an Amazon stock forecast is $270.00 and the lowest target is $118.00.
The average price target for an Amazon stock forecast is $176.04, which is over 25% upside from current levels, at the time of writing.
Source: TipRanks, August 9, 2022
An Example of Amazon Stock Trade
Here’s what an example trade on Amazon stock might look like:
- Buy the stock if it breaks the 130 USD level to take into account the current volatility of the markets.
- Target slightly below analysts’ average price target at $176.
- Keep the risk low, maximum 5% of your trading account.
- Time horizon = 1 to 6 months.
- For 10 Amazon shares purchased:
- If target is reached = $460 profit ($176 – $130 * 10 shares).
It’s important to keep in mind that the stock price is unlikely to rise in a straight line and may even continue to correct before bouncing back, especially given the level of uncertainty and volatility in the stock markets. global.
Therefore, be sure to apply proper risk management, which is one of the most important aspects of profitable trading. Indeed, it is necessary to always know how much you can potentially lose on one of your positions.
Commissions are another factor to consider, as they can reduce your profits. With the Admirals Invest.MT5 account, you can buy US stocks from $0.02 per share. This means that buying 10 Amazon shares would incur a commission of $0.20 ($0.02 * 10 shares).
The minimum transaction fee is 1 USD. So the example trade above would result in a commission of only $1 in total!
How to Buy Amazon Stock in 4 Steps
With Admirals, you can buy shares of companies like Amazon with a low commission of just $0.02 per share and a minimum commission of just $1 on US stocks.
- Open an Invest.MT5 account with Admirals to access the Trader’s Room.
- Click on Trade on one of your real or demo accounts to open the web platform.
- Look for Amazon at the bottom of the “Market Watch” or “Market Watch” window and drag the symbol onto your chart.
- Use the one-click trading feature, or right-click and open the order ticket to fill in your position size, stop loss and take profit level.
Source: MetaTrader 5 Web Admirals – Past performance is not a reliable indicator of future results or future performance.
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Do You Have a Different Approach?
Keep in mind that all analysis and trading insights are based on the author’s personal view and experience.
If you think the Amazon stock price is more likely to fall, you can also sell it short from a CFD (Contracts for Difference) trading account provided by Admirals.
Trade.MT4 and Trade.MT5 accounts allow you to speculate on the direction of stock prices using CFDs.
This means that you can make buy (long) and sell (short) trades in order to profit from both rising and falling prices. To learn more about CFDs and how they work, you can refer to the article Understanding CFDs on the stock market.
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