Amazon’s Stock May Rebound From Steep Decline
Data coding method: shares of (AMZN) have fallen 17% from their highs as part of the broader stock market sell-off led by technology. However, technical analysis now suggests that the shares may be due to bounce 11% in the coming weeks.
The e-commerce company’s shares saw further weakness when the company reported third-quarter results that came in below expectations. That has led analysts to lower fourth-quarter revenue estimates.
The chart shows that the stock has freed itself from two strong bearish trends that began in early autumn. In addition, the stock has found a significant level of technical support at $ 1,620, and that suggests the stock may rise and retest technical resistance around $ 1,770. If the stock breaks and rises above the resistance around $ 1,770, it is likely to rise to $ 1,840, an 11% increase from its current price of.1,660.
In addition, the Relative Strength Index has also begun to rise, which would suggest that the bullish momentum is starting to move towards the action.
The stock fell after weak third-quarter results, with revenue about 1% below estimates. That has led analysts to cut fourth-quarter revenue estimates by 3% over the past three months to.71.9 billion.
In addition, analysts have reduced the estimated revenue growth rates for 2019 by 2% to $ 280.7 billion. In addition, 2020 revenue estimates have declined by more than 3% to $ 332.0 billion. The slower revenue growth forecast has been a driver for recent falls in stock prices.
Amazon shares are still not cheap and are trading at the upper end of their historical price-to-sales ratio around 3. Before 2018, the stock generally experienced a peak price / sell ratio around 2.5. This may suggest that stocks are a little overvalued.
Chart showing forward revenue estimates for Amazon.com, Inc. (AMZN)
For stocks to sustain the rally, the company will need to post better-than-expected revenue growth in the fourth quarter, especially during the key fourth-quarter holiday season. In addition, strong revenue guidance for the start of 2019 will be key.
Amazon shares have been one of the big growth stories of the past five years, and the recent decline has been pronounced. It’s not the first time the stock has witnessed a sharp decline, but as the business continues to mature, revenue growth will likely continue to decline, and that will put more pressure on the company’s ability to increase its profits.