AMAZON – Corona profits are gone

To analyze

Amazon has been one of the biggest beneficiaries of the corona pandemic. Amazon’s share price more than doubled between March 2020 and July 2021. But now the Crown profits are gone again. Is Amazon Interesting for Bargain Hunters?

• Amazon.com Inc. – WKN: 906866 – ISIN: US0231351067 – Price: $84,180 (Nasdaq)

In the current trading week, Amazon shares have fallen to a low of $81.69 so far, nearly hitting a low (adjusted for division) during the coronavirus crash in March 2020 at $81.302. Compared to the all-time high reached in July 2021, the price has more than halved.

Although Amazon shares initially lost in the Corona crash of 2020, the pandemic has subsequently proved to be a huge tailwind for Amazon’s business model. In July 2021, Amazon shares reached an all-time high of USD 188,654, more than doubling the share from the Corona low in about 16 months.

While the pandemic has given Amazon a tailwind, the current high-inflation environment is creating headwinds as labor and transportation costs have soared. In the current financial year, Amazon will therefore probably also be in the red. According to analyst estimates, earnings per share won’t again surpass the level of the record year 2021 until 2025. Free cash flow is also likely to be significantly negative this year, but positive again as early as 2023.

It remains to be seen whether Amazon can regain its former strengths against a backdrop of faltering globalization and rising inflation. As the cloud business is expected to continue to grow, chronically low-margin e-commerce could increasingly prove to be a nuisance for Amazon.

At the same time, the sharp drop in price naturally makes the action attractive to bargain hunters, while value investors are eyeing the significantly reduced valuation, which is still quite ambitious for a company without sustainable earnings growth.

Also read my colleague Bernd Senkowski’s datasheet evaluation:[–>AMAZON – Ist die Aktie auf diesem Kursniveau ein Pflichtinvestment?

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