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Amazon Is Down Almost 40%, Time to Consider Buying AMZN Stock

AMZN stock - Amazon Is Down Almost 40%, Time to Consider Buying AMZN Stock

Source: Eric Broder Van Dyke / Shutterstock.com

What a disaster the tech space has become and Amazon (NASDAQ:AMZN) is not helping matters. At one point in time — like in 2020 or 2021 — AMZN stock may have been an anchor. It may have been a stout company with a market capitalization in excess of $1 trillion helping to stabilize the market.

In effect, it could have been an Apple (NASDAQ:AAPL).

Apple still sports a $2.5 trillion market capitalization and is down “just” 16% from the highs. However, when we look at the rest of FAANG, it’s not the same situation. It’s certainly not the same situation with Amazon, which is down 42% from the all-time high.

While investors don’t tend to look at Amazon as the financial juggernaut that Apple, Microsoft (NASDAQ:MSFT) and others are, they still look up to it. Despite the massive pullback, the company still sports a $1.1 trillion market cap.

That alone of course does not make it a buy. However, love Amazon or hate it, investors can’t deny that it has a dominant position in e-commerce and in cloud computing. Those industries are secular growth markets and while AMZN stock is down massively today — and may still fall further — it will at some point stage a rebound.

Daily chart of AMZN stock
Click to Enlarge
Source: Chart courtesy of TrendSpider

When we look at the chart, you can see that a 40% decline is not all that common. The monthly chart on the left dates back to 2010 and there has not been one 40% correction in all that time.

That’s right. The oft-hated AMZN stock that was the centered of bears’ attention until Tesla (NASDAQ:TSLA) came around, has not had a 40%-plus correction in more than a decade. The last time it fell more than that was the 65% decline it suffered in 2008 during the financial crisis.

While earnings are a little bumpy, analysts expect steady growth out of Amazon. Estimates call for 12% growth this year, lifting Amazon’s sales above $525 billion, and for an acceleration up to 17% growth in 2023.

Just because the stock has fallen 40% doesn’t mean it can’t go on to fall 50% from the highs. For that matter, it doesn’t mean that another 65% decline isn’t in store. However, for long-term investors who like solid companies, AMZN stock is one to watch.

Accumulating with a dollar-cost average approach may work best in this scenario. It allow investors to slowly build a position without having to time the market. However, for those looking for a more direct risk/reward approach, let’s see if we hit the $2,000 to $2,050 area. That was a major resistance zone and a breakout level for the stock.

On the date of publication, Bret Kenwell 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.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/amazon-is-down-almost-40-time-to-consider-buying-amzn-stock/.

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