Amazon is highly likely to surge past $4,000 this year.
Like many other tech stocks, last March was a kick in the teeth that served up a quick correction.
But unlike a handful of sectors, investors saw their faith in Amazon rewarded when the stock reversed and roared to $3,500.
After a sharp spiral down off the March lows, as investors saw Amazon as a beneficiary of lockdown measures, the stock had been consolidating within a narrowing range over the past several months.
Traders have solid support levels at $3,100 and any trader should be buying AMZN at anything close to that.
The price action suggests that AMZN has a favorable chance to break up to the upside some point after what was a blowout fourth quarter results of net income of decisively more than the predicted $6.3 billion and revenue approaching $120 billion.
They outdid themselves and reported earnings of $14.09 per share on record revenue of $125.56 billion.
The e-commerce and technology titan went into its important holiday quarter report on a strong note and 2021 will be no different as features if the pandemic persists.
Just a quick rewind to the third quarter, revenue and earnings also easily beat consensus estimates, and Amazon perennially guides up. This is becoming a constant pattern with the stock boding well for the future stock price.
Investors like companies who constantly over-deliver on earnings metrics.
The biggest bombshell of yesterday’s report was clearly that Jeff Bezos, the company’s founder and CEO, would leave from his role in the third quarter of 2021.
I thought it was interesting that after-hour trading was largely indifferent as investors were digesting the founder leaving his creation.
Next on deck is Andy Jassy, who currently leads Amazon Web Services (AWS), and will take over Bezos’ job.
Bezos will stick around in an “executive chairman” role and I envision this as Bezos not really leaving and still handling all the “big vision” stuff.
Inside the company, Jassy is the highest profile candidate and part of the most profitable part of the company giving him major clout.
This is out of the same mold of Microsoft’s CEO Satya Nadella who was also promoted to the top via the cloud division.
Bezos will now have more time to spend on Day 1 Fund which is a non-profit organization that will launch and operate a network of high-quality, full-scholarship Montessori-inspired preschools in underserved communities.
Along with that, he will spend time with the Bezos Earth Fund, Blue Origin, The Washington Post while Jassy handles the daily grind of the operation.
Don’t forget that Bezos is the largest shareholder, but because Amazon has become quite heralded for grooming top-level management, the company won’t miss a beat with Jassy.
Just look at what Jassy did in the fourth quarter.
Amazon Web Service (AWS) grew revenue 28% to $12.74 billion. That year-over-year growth rate held roughly steady compared to the third quarter and is the U.S. market share leader in cloud web hosting.
AWS operating income grew even more strongly, jumping 37% to nearly $3.6 billion.
Awarding the best performing manager at a company is something good companies do.
The pandemic, in itself, was a major catalyst to take revenue growth higher and sales got a boost from the company's annual Prime Day event, which was pushed back to the fourth quarter this year from its usual place in the third quarter due to the global crisis.
This year could be a similar repeat of 2020 with consumers crazy for e-commerce services and Amazon, best of breed service.
This should be a buy on every small dip stock and simply the best company in the world right now whether examining tech or anything else.
