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What Does Market Sentiment Look Like for Amazon.com (AMZN)?

While Amazon.com’s (AMZN) continued focus on capitalizing on emerging trends like AI and enhancing Prime Video offerings garners investors’ attention, it currently faces various legal challenges that might lead to significant volatility. Let’s discuss its near-term prospects in detail...

Amazon.com, Inc. (AMZN) has recently announced an investment plan worth up to $4 billion in cash geared toward the prominent startup Anthropic. This move is a strategic effort to strengthen its capabilities and stance against its burgeoning cloud competitors in artificial intelligence.

Also, the company plans to start rolling out ads on Prime Video movies and TV shows in early 2024. An ad-free version will be accessible for additional charges. AMZN expects its decision to help it “continue investing in compelling content and keep increasing that investment over a long period of time.”

Nonetheless, despite a boost in optimism regarding these ventures, Amazon finds itself at the center of a myriad of lawsuits, including U.S. consumer and state antitrust litigations. A pending lawsuit from the U.S. Federal Trade Commission, set to take effect as early as this week, also compounds its legal challenges. Such factors position the retail behemoth in line for potential damages quantifiable in billions of dollars.

Therefore, significant short-term volatility is predicted for the stock. Consequently, potential investors might consider it prudent to await a more favorable entry point into acquiring this stock. An evaluation of AMZN’s key metrics could bring further clarity into decision-making.

Analyzing Amazon’s Financial Performance: A Comprehensive Review from 2020 to 2023

The trailing-12-month net income performance of AMZN has displayed a fluctuating trend over the last three years, as revealed by the provided data series.

  • On September 30, 2020, Amazon’s net income sat at $17.38 billion.
  • It witnessed an increase reaching $21.33 billion by December 31, 2020.
  • In the first quarter of 2021, the net income grew to $26.90 billion and peaked at $29.44 billion in the second quarter of 2021.
  • This was followed by declining to $26.26 billion in the third quarter and then rebounding to a notable $33.36 billion by the end of the year 2021.
  • In 2022, Amazon experienced a downward trend in the first two quarters, where net income dropped to $21.41 billion and $11.61 billion, respectively.
  • A stability was noticed in the third quarter, with a slight decrease to $11.32 billion. However, the company reported a net income of -$2.72 billion at the end of 2022, marking its first negative net income in the reporting period.
  • The year 2023 started with a significant improvement as net income hit $4.29 billion in the first quarter and increased dramatically to $13.07 billion in the second quarter, indicating a recovery from the loss incurred at the end of the previous year.

Although Amazon experienced a dip at the end of 2022, the recent upward trend in 2023 suggests a return to the growth trend. Notably, between the first value from September 30, 2020, and the last value from June 30, 2023, the net income represents a growth rate of about -24.75%. However, it’s crucial to note that Amazon has shown considerable resilience in rebounding from a substantial loss at the end of 2022 towards a positive trend in the first half of 2023.

The Current Ratio trend of AMZN indicates fluctuations over the observed period, with a general decline in recent years. The summary of data is as follows:

  • The Current Ratio started at 1.11 as of September 2020.
  • By December 2020, the Current Ratio slightly declined to 1.05.
  • There were insignificant changes until June 2021, where it increased to 1.20.
  • In a subsequent fall to 1.13 in September 2021, this ratio surged again to 1.14 in December 2021.
  • However, the Current Ratio began to continually decline in 2022, reaching 0.96 at the end of the first quarter and then decreasing to 0.95 in the second quarter.
  • This downtrend continued into the third quarter, where it registered a value of 0.94, and maintained this same figure until the year's end.
  • In the first quarter of 2023, it further reduced to its lowest figure, 0.92, but recovered marginally to 0.95 by June 2023.

Overall, calculating from the first value in September 2020 (1.11) to the last value in June 2023 (0.95) indicates a negative growth rate of approximately 14%. Thus, although there are some fluctuations, the more recent trend for the Current Ratio of AMZN shows a declining pattern.

The Asset Turnover of AMZN has witnessed a declining trend over the given period of data, which spans from September 2020 to June 2023.

  • September 2020: Starting at a value of 1.41.
  • December 2020: Slight increase to 1.43.
  • March 2021: Minor drop to 1.42.
  • June 2021: Dropped to 1.38.
  • September 2021: Further fell to 1.32.
  • December 2021: Declined to 1.26.
  • March 2022: Continued dropping to 1.21.
  • June 2022: Marginally declined to 1.19.
  • September 2022: Slightly increased to 1.20.
  • December 2022: Minimal decrease to 1.19.
  • March 2023: Dropped further to 1.18.
  • June 2023: Continuing the declining trend, decreased slightly to 1.17.

Growth Rate Calculation: The growth rate, calculated as the change from the first value to the last, indicates a decline of approximately 16.9%. Thus, the data reveals that AMZN’s Asset Turnover decreased from 1.41 to 1.17 from September 2020 to June 2023.

The Analyst Price Target for AMZN witnessed a sharp change over the time frame. The data series trends and fluctuations are highlighted as follows:

  • Between November 2021 to mid-May 2022, the Analyst Price Target remained robust at around $4000, albeit with minor upward adjustments.
  • In late May 2022, there was a sudden sharp fall, with the target price going down to $3725. Moving into June, we have observed a significant drop to a striking low of $183.
  • Further dipping in trends were seen over subsequent months, reaching a low point of $140 from November 2022 through early January 2023.
  • From February 2023 onwards, we observe stabilization and a slow creep upward in the Analyst Price Target, eventually regaining its ground to $172 by September 2023.

The reported Analyst Price Target for AMZN has shown a decreasing trend between the first ($4000) and last values ($172). This represents a growth rate of approximately -96%. The most drastic fluctuations in the price targets can be observed between May and June 2022, and then a gradual upward adjustment starting in February 2023. Given the stark fluctuations and eventual decrease seen in these trends, further attention toward more recent developments is warranted to continue garnering a comprehensive understanding of the position of AMZN against the analysts’ expectations.

Six-Month Review of Amazon Share Price: Steady Growth with Minor Fluctuations

From the AMZN share price data in the past six months, we see a generally increasing trend with some minor fluctuations.

  • The recorded share price of AMZN started around $102.45 on March 31, 2023, experiencing a slight decrease and increase, then reaching $106.56 by April 28, 2023.
  • The prices then show moderate growth from $106.56 as of late April to $116.4 by the end of May 2023.
  • Entering June 2023, the prices continue to rise steadily, finishing at $129.15 as of June 30, 2023.
  • AMZN’s share price enters a period of rapid growth at the beginning of July, 2023. By mid-July, it reaches $131.03, with another spike ending at $132.59 by July 21, 2023.
  • The upward trend is slowed down due to a minor decrease towards the end of July at $129.67 but picks up again, entering August with a recorded price of $133.37 as of August 4, 2023.
  • Going forward, despite a slight drop during the third week of August, it manages to reach the peak at $142.64 on September 15, 2023.
  • In the last two weeks of September 2023, there is a notable decrease, ending at $125.98 by September 26, 2023.

Overall, AMZN’s share price has shown a clear growing trend from late March to late September 2023, experiencing an approximately 27.77% increase ($130.85 over starting $102.45) over this period. However, towards the end of the provided data, there is a deceleration in the price growth. Here is a chart of AMZN’s price over the past 180 days.

Analyzing Amazon’s Fluctuating Growth, Stable Quality, and Rising Sentiment in 2023

AMZN has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #15 out of the 58 stocks in the Internet category.

Amazon.com Inc. (AMZN) ’s notable dimensions for the stated period are as follows:

Growth: Growth shows a fluctuating trend over time, with values oscillating between 80 and 87 before dropping to 73 by September 2023.

  • March 2023: 80
  • April 2023: 81
  • May 2023: 87
  • June 2023: 86
  • July 2023: 86
  • August 2023: 75
  • September 2023: 73

Quality: Quality remains relatively stable, hovering around the high-70s to mid-80s throughout the period.

  • March 2023: 81
  • April 2023: 81
  • May 2023: 79
  • June 2023: 79
  • July 2023: 79
  • August 2023: 84
  • September 2023: 85

Sentiment: Sentiment sees a clear upward trajectory, starting in the mid-50s in March and ending in the high-90s by September.

  • March 2023: 57
  • April 2023: 52
  • May 2023: 97
  • June 2023: 99
  • July 2023: 95
  • August 2023: 99
  • September 2023: 99

How does Amazon.com Inc. (AMZN) Stack Up Against its Peers?

Other stocks in the Internet sector that may be worth considering are Yelp Inc. (YELP), Travelzoo (TZOO), and Despegar.com Corp. (DESP) -- they have better POWR Ratings.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

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AMZN shares were trading at $124.91 per share on Wednesday morning, down $1.07 (-0.85%). Year-to-date, AMZN has gained 48.70%, versus a 12.58% rise in the benchmark S&P 500 index during the same period.



About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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