Amazon Just Dropped Under $100, Temporarily

Amazon was cut in half in 2022.  All thanks to the tech stock rout, soaring inflation, fed-up consumers, slowing sales, and rising interest rates.  Amazon’s market cap shrank from $1.7 trillion to $834 billion.  However, don’t write Amazon off just yet.  For one, macro conditions could cool off soon.  In fact, with inflation coming down, it could encourage the Federal Reserve to ease off raising interest rates. For companies like Amazon that could be a big green light.

We also have to consider that AMZN is dirt cheap, trading at just 2.2x sales. First, according to Investorplace, that’s below its five-year average of 3.4x and is the cheapest it’s been since 2015.  For AMZN, 2.2x is far too low.

Two, “Amazon’s online retail business will likely grow at a fairly steady 10% annualized clip over the next few years. The physical store business is good for about 5% growth per year. The ad business will likely grow around 20% per year, representative of market share expansion in a 10% to 15% growth industry. And the cloud business will likely grow around 25% per year, in line with market estimates for cloud spending growth. Altogether, this is a company with clear visibility to mid-teens revenue growth over the next five years,” they added.