Amazon Looks Like a Bargain at Pre-Pandemic Prices

  • Amazon (AMZN) fell considerably after first quarter earnings disappointed.
  • AMZN stock is now selling for what it did in the pandemic’s early days.
  • Amazon is bigger and more profitable than it was then, so investors should buy AMZN stock.
Closeup of the Amazon (AMZN) logo at Amazon campus in Palo Alto, California. The Palo Alto location hosts A9 Search, Amazon Web Services, and Amazon Game Studios teams.

Source: Tada Images /

Amazon (NASDAQ:AMZN) stock opened May 2 at prices not seen since May of 2020. That would be about $2,400 per share, with a market cap of $1.2 trillion. Shares of AMZN stock dropped 14% on April 29 and were still falling May 2 in the pre-market.

For those with short memories, it’s a disaster. For those with longer-term memories, it’s a correction. At the start of the pandemic, Amazon sold for $1,800 per share. It crossed $2,000 for the first time at the end of January 2020.

It may cross that mark again, assuming the inflation scare continues. There’s a lot of money to be made in fear. But before you start thinking inflation will take down Amazon — or any tech stock, for that matter — there’s something you need to know.

AMZN Amazon $2,412.57

Technology versus Inflation

Technology can whip inflation now. The cloud and logistics machine Amazon built in the last decade is amazing. The company can break bulk in a warehouse and get any of its products to your door for what it once cost to put them in Walmart (NYSE:WMT) and wait for you to drop by.

All the gas and all the time you once spent going to the store is now gone. It’s money in your pocket.

That’s not all. For millions, the costs of suits, gas and gridlock have disappeared in the last two years. Thank Amazon Web Services (AWS), which brought in $62 billion in 2021. In 2019, its revenue was $35 billion.

Amazon earned $18.5 billion on that $62 billion in revenue last year. It earned $9.2 billion on AWS in 2019.

It’s true that retailing is a low-margin business. Amazon’s store lost money in the first quarter, almost $3 billion. But it generated $39 billion of operating cash flow last quarter, which was considered a down quarter. It generated the same amount in the first quarter of 2020, while it was on the way up.

Valuing AMZN Stock

You can say, “$39 billion is $39 billion,” and sell AMZN stock. But Amazon has never been about the last quarter. It’s about next year and the year after that.

Amazon has been using this “downtime” to improve its logistics, catching up on its pandemic growth. Some of my Amazon orders are now coming in the day I place them. Supply chains are filling up.

Even if you think Amazon’s retail operation is worth no more than that of Walmart, the latter is up over the last year. Amazon is now down nearly 29%. WMT stock has always sold at a discount to its sales. Its market cap is currently 73% of its 2021 revenue. Maybe Amazon’s store platform should be valued in the same way.

But what about Prime Video? What about Alexa, Fire and its Kindle monopoly? What about Pillpack and Amazon Care, its new health care initiative? All these are growing, largely thanks to the cloud. AWS still has one-third of a market where the dominance of larger players like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) is only growing.

The Bottom Line on AMZN Stock

For investors with a three-year time horizon, AMZN stock today is an irresistible bargain. The problem is that some investors, especially those coming into retirement, have a shorter time horizon. It would be wise for these investors to raise cash some other way.

I have owned Amazon shares for nearly a decade. I bought them at about $315 and have since gotten my cash out, and I’ll be buying more soon. Amazon’s best days are still ahead. I would still rather own it than Walmart.

On the date of publication, Dana Blankenhorn held long positions in AMZN, MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at, tweet him at @danablankenhorn, or subscribe to his Substack.

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