Amazon (NASDAQ:AMZN) has provided essential goods and services throughout the novel coronavirus pandemic, as well as delivered consequential returns to investors. But is AMZN stock still a buy?
Let’s look at what’s shaping today’s AMZN stock, both off and on the price chart, then offer a risk-adjusted determination based on those findings.
From doorstep deliveries of life’s necessities and more frivolous purchases, cloud services or streaming entertainment, Amazon has been a godsend the past year during the Covid-19 pandemic.
AMZN Stock Performs
And for those also taking a cue from legendary Fidelity fund manager Peter Lynch, investing in what you know has paid off big-time. Shares are up roughly 100% since last March’s pandemic-driven bear market briefly swept over Wall Street.
To be fair, AMZN stock’s performance is mostly par for what’s proven a windfall for the broader stock market. Gains in the S&P 500 and Nasdaq are similar enough for government and non-government accountants not to squabble.
Still, Amazon has managed to produce additional shareholders value amid unsettling anti-trust threats. Right? It has.
AMZN stock of course isn’t alone in the crosshairs of regulators. Apple (NASDAQ:AAPL). Facebook (NASDAQ:FB). Alphabet (NASDAQ:GOOGL) The market’s largest tech outfits are all facing similar challenges. Yet specific to AMZN and not to be overlooked, Federal Trade Commission nominee Lina Khan notoriously published a seminal article, “Amazon’s Antitrust Paradox” in the Yale Law Journal back in 2017.
Bottom-line, it doesn’t take much to think Amazon may have more of a target on its back than its peers if Ms. Khan is confirmed. And still AMZN stock persists.
AMZN stock has also performed admirably in the face of the Biden administration’s plans to lift the tax on capital gains by nearly 50%. Again, it’s not entirely alone on that front. But with shares up a stunning 1,500% thereabouts over the past decade, it’s certainly enough to give investors a reason to pause. And yet, Amazon shares have kept up with the bellwethers over the past year.
And those aren’t the only weights AMZN is navigating and thus far, successfully at that.
As hinted, there is the challenge of life after the pandemic. As the U.S. braces for a unified re-opening next month, it’s reasonable to think there will be less clicking to buy and watch on Amazon from the comfort of one’s couch going forward.
Lastly, there’s Jeff Bezos. Earlier this year, the man behind AMZN’s diversified fortress announced he’s stepping down as CEO. To say the least, it’s the end of what’s been a disruptive era. Thank you and in other ways, I hate you Amazon. Just don’t fear and loathe AMZN stock.
AMZN Stock Weekly Price Chart
Source: Charts by TradingView
On top of AMZN stock’s ability to “mostly” withstand today’s threats, the other good news are challenges like Amazon’s are or can be a two-way street. Sometimes those problems simply vanish. And other times, they don’t work out as advertised.
For one, many see breaking up Amazon’s cloud, retail and streaming businesses as more valuable to shareholders with the sum of the parts worth more than today’s AMZN stock.
What about life after Covid? Let’s not kid ourselves. Consumer habits don’t die easily. And clicking and watching on the go from your mobile app ensures no couch is required.
How about regulators looking to make a name for themselves? Are you willing to take a wait-and-see approach and pull the plug on AMZN stock? This is the U.S. government after all. And that goes for Biden’s plans, well-intentioned or otherwise.
What to Do
Technically speaking, I wish the news were as good for recent buyers of AMZN stock’s failed breakout from a high-level double bottom pattern. But investing in tech stocks of all shapes and sizes has proven difficult for that type of trade set up the past couple weeks. It is what it is.
More importantly, today, tomorrow and well into the future – don’t discount Amazon’s ability to pick up its bootstraps. And as likely for investors, buying those rarer AMZN stock discounts as part of a hedged collar position is likely to continue building long-term, outsized wealth for the portfolio.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.