It was a little more than a month ago that I gave a pretty bullish assessment of Amazon (NASDAQ:AMZN). I said that I still expected it to have a pretty good year despite the economic downturn and pressures against major growth stocks. But time has been unkind to Amazon over the last few weeks and the smart money is starting to bail out of AMZN stock.
Does that mean I’m wrong? Well, I may have been wrong about Amazon stock having a solid year in the black for 2022. But I don’t think I’m wrong about the long-term story of Amazon. I just think I have a different (i.e., long-term) perspective about AMZN, while analysts are looking at the short-term story.
If you’re wanting to make money over the next quarter or two, Amazon’s probably not for you. But if you consider your holdings in terms of years and decades, then Amazon is an appealing company despite the challenges its facing right now.
AMZN Stock at a Glance
As the largest e-commerce company in the world, Amazon claims almost 40% of the global market. Additionally, it had a rough 2021. This was primarily due to challenges in the global supply chain in the end of the year, as well as absolutely brutal year-over-year comparison to its Covid-inflated 2020 numbers.
But 2022 has been even worse. AMZN stock is down roughly 40.5% year-to-date. That includes a dip of 28.5% just in the last 30 days.
Earnings for the first quarter, released in late April, didn’t do anything to ease investors’ fears. Revenue was slightly better than expected, reaching $116.44 billion versus analysts’ estimates of $116.3 billion. But earnings per share were far below what Wall Street expected. AMZN reported $7.38 per share while analysts expected the company to earn $8.36 per share. Another big problem was in advertising, where amazon reported earnings $7.88 billion when analysts were expecting $8.17 billion.
And then there was the company’s disastrous investment in electric vehicle (EV) company Rivian Automotive (NASDAQ:RIVN). Amazon had an 18.1% stake in Rivian in hopes of capitalizing on the interest in EVs. And don’t forget that Amazon is looking at EV options as it works to optimize the last-mile problem of its massive delivery fleet.
But Rivian stock lost half of its value and Amazon reported a loss of $7.6 billion on its RIVN stock.
And things don’t look much better for the second quarter. Amazon forecast that second quarter revenue will be $116 billion to $121 billion, which is much lower than the $125.5 billion average estimate from analysts.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Amazon Chief Executive Officer Andy Jassy said.
With those kinds of problems, is it any wonder that analysts are finally starting to turn their backs on AMZN stock? Citi analyst Ronald Josey took Amazon off of the company’s Focus List because of what he described as the macro uncertainty facing the company. And Third Point, a New York-based investment advisor, reduced its exposure to AMZN stock.
The Bottom Line on AMZN Stock
If you invest in Amazon stock, you’ve got every reason to be disappointed. And if you are close to or at retirement age, then Amazon is not a stock you can afford to keep in your portfolio.
But if time is on your side, Amazon stock is still appealing. Just don’t expect to see any profits from your purchase in the immediate future.
On the date of publication, Patrick Sanders 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.