I’ve been a fan of Amazon.com, Inc. (AMZN) for quite some time. As I’ve mentioned in a previous article, the company is a textbook example of one that creates new and innovative products that truly change the way we live.
You’ve likely experienced this first-hand already in one way or another, whether you’re a loyal Prime member or indirectly use the company’s popular cloud computing services.
Amazon stock has spent much of the summer trading in a range, although it did get a little burst of life after bouncing off its 50-day moving average (the blue line in the chart below) amid the Brexit sell-off and subsequent rally.
AMZN hit fresh highs and has been consolidating those gains since, but Thursday’s strong second-quarter earnings beat seems to have woken the stock back up, and once again, it’s climbing to record highs.
It looks like the traders who bid up Amazon stock heading into the numbers had a good idea of what the commercial juggernaut was going to report, because $745 now looks remote. Earnings of $1.78 per share came in well above the now-lowly $1.11 per share that Wall Street was looking for. Revenue climbed 30% to $30.4 billion, marking more than four years of double-digit top-line growth.
The conference call was just about as upbeat as it gets. Management stated that the second annual Prime Day event was the biggest day ever for AMZN, as well as a record day for the company’s devices globally. Compared to Prime Day 2015, worldwide orders grew by a whopping 60%. Plus, products such as the Fire TV (the No. 1 best-selling streaming media player in the United States), Alexa and Kindle continue to grow, setting AMZN stock up nicely for future upside potential.
Bottom Line on Amazon Stock
Amazon stock has received a lot of price target increases from analysts since the release, and just like the rest of Wall Street, I’m very pleased with the results.
In the previous wave of post-earnings euphoria three months ago, AMZN soared 15% in a matter of days. Given the strong results, we could very well see a repeat of that action.
The numbers clearly show that AMZN remains on the right track, and while it may be stuck in a tighter trading range every now and then (as we’ve seen this summer), I think Amazon stock has what it takes to continue moving higher over the longer term.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
