Amazon: Short-Term Sell, But Possible Buy And Hold Next Year (NASDAQ:AMZN)

Amazon Shows Short-Term Weakness, but Strengths Could Start in 2023

Amazon (NASDAQ:AMZN) has been a strong performer as a stock for many years, but this year has been very challenging for many investors. Based on forward-looking fundamentals, upper strength will likely continue next year. I think short-term holding is wise based on technical analysis and other hints.

Long-Term Fundamentals Looks Exceptionally Strong

Growth

Growth is a mixed story, with declines and growth to note. Revenue and profit have been quite varied since 2017.

Unnamed: 0	2017	2018	2019	2020	2021
Period	FY	FY	FY	FY	FY
Revenue growth	0.308	0.309	0.205	0.376	0.217
Gross profit growth	-0.400	2.305	0.252	0.261	-0.296
EBIT growth	-0.019	2.025	0.171	0.575	0.086
Operating income growth	-0.019	2.025	0.171	0.575	0.086
Net income growth	0.279	2.321	0.150	0.841	0.564
EPS growth	0.290	2.188	0.141	0.819	0.577

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Source: Financial Modelling Prep

Enterprise

The critical stock price and market cap metrics have shown strong upward strength since 2017.

Unnamed: 0	2017	2018	2019	2020	2021
Symbol	AMZN	AMZN	AMZN	AMZN	AMZN
Stock price	71.891	83.521	93.534	160.310	143.978
Number of shares	9.600 B	9.740 B	9.880 B	10 B	10.120 B
Market capitalization	690.154 B	813.499 B	924.116 B	1.603 T	1.457 T
Enterprise value	707.558 B	805.244 B	911.438 B	1.645 T	1.537 T

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Source: Financial Modelling Prep Estimates

Forward-looking estimates look strong moving into next year. All critical metrics show momentum could strengthen up until 2026. As a result, profit growth and cash flow per share are expected to accelerate. This momentum is impressive for a company with a market cap size of more than a trillion dollars.

Yearly Estimates	2022	2023	2024	2025	2026
Revenue	521,154	598,344	684,114	767,116	875,413
EPS	0.02	2.25	3.74	5.27	7.40
P/E Ratio	5,898.26	51.33	30.95	21.94	15.63
EBIT	15,130	30,142	49,805	70,647	96,274
EBITDA	–	88,504	113,030	141,783	180,975
Net Profit	523	24,549	38,754	55,436	77,838
Net Profit Adjusted	21,141	36,954	56,096	65,604	89,597
Gross Income	224,503	264,222	312,998	347,159	397,660
Cash Flow per Share	6.31	8.56	11.34	12.82	18.67
Free Cash Flow	-1,819	26,230	56,329	77,592	122,635
Free Cash Flow per Share	-0.15	2.41	6.13	9.53	11.76
Book Value per Share	15.24	18.58	25.15	30.15	–
Net Debt	15,351	-9,278	-47,833	-86,812	-181,088
Research & Development Exp.	66,475	74,755	83,506	84,155	94,330
Capital Expenditure	61,092	60,687	61,745	65,566	59,340
Selling, General & Admin. Exp.	168,711	156,392	145,262	111,016	–
Shareholder’s Equity	150,316	191,330	249,367	323,834	439,693
Total Assets	455,317	515,053	595,453	652,473	816,119

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Source: Business Insider

Technical Analysis Shows Weakness Short Term

Fibonacci

The Fibonacci orange trend line marks a time to place a stock order. In this case, the current stock price is far from when it crosses the trendline. So is it not worth taking up AMZN positions while your capital is tied up until the stock reverses?

MACD

Another way to confirm a market entry is to use MACD, where the stock price crosses through the zero line. This MACD line is much closer to this compared to the Fibonacci trendline. Is this a more reliable indicator for market entries than the Fibonacci trendline? I think it might be best to use this indicator to measure a market entry.

RSI

Always remember that RSI could be used to measure when to exit a position. An exit can occur as the stock price approaches the Oversold condition in the RSI. Amazon is currently oscillating between undersold to oversold conditions.

Prediction via AI

Monte Carlo

The results of this Monte Carlo simulation show most predicted paths point up versus down for future stock pricing moves. Therefore, it might be wise to use the technical indicators mentioned above for timing market entries and exits.

Regression

The 30-day predicted red regression line shows an upward stock pricing move. In past reports, it has been shown not to use this indicator exclusively to time the stock price. Therefore, this report overlays many analytic techniques used in this report.

Risk Shows Sell

Analyst Recommendations

There appears to be an overwhelmingly current strong sell recommendation on Amazon, which the Technical Analysis supports. However, long-term forward guidance shows strong buy momentum starting into the latter half of 2023.

Interval	Recommendation	Buy	Sell	Neutral
One month	Strong_Sell	1	16	9
One week	Strong_Sell	1	17	8
One day	Sell	5	11	10

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Source: TradingView

Insider Stats

These stats can benefit us with insight into what capital firms and even Amazon executives are doing. For example, as you can see, in August and September months they were mostly selling stock during this period.

This matches with the majority recommending a solid sell.

Unnamed: 0	X	Filing Date	Trading Date	Ticker	Insider	Title	Trade Type	Price	Quantity	Owned	Delta Own	Value
1	M	2022-09-16 17:12:07	2022-09-14	AMZN	Selipsky Adam	CEO Amazon Web Services	S – Sale	$127.94	-1,020	115,663	-1%	-$130,499
2	M	2022-09-01 16:58:32	2022-08-30	AMZN	Selipsky Adam	CEO Amazon Web Services	S – Sale	$128.60	-1,020	116,683	-1%	-$131,170
3	nan	2022-08-23 17:50:33	2022-08-22	AMZN	Herrington Douglas J	CEO Worldwide Amazon Stores	S – Sale	$134.25	-7,448	1,111,194	-1%	-$999,873
4	D	2022-08-23 17:37:46	2022-08-22	AMZN	Olsavsky Brian T	SVP, CFO	S – Sale+OE	$135.55	-16,720	48,962	-25%	-$2,266,396
5	D	2022-08-23 17:31:47	2022-08-22	AMZN	Zapolsky David	SVP	S – Sale+OE	$134.25	-8,360	68,620	-11%	-$1,122,351
6	D	2022-08-23 17:25:56	2022-08-22	AMZN	Reynolds Shelley	VP	S – Sale+OE	$134.23	-3,480	122,436	-3%	-$467,125
7	D	2022-08-17 16:53:14	2022-08-15	AMZN	Jassy Andrew R	Pres, CEO	S – Sale+OE	$142.29	-23,620	1,967,343	-1%	-$3,360,817
8	DM	2022-08-17 16:46:00	2022-08-15	AMZN	Selipsky Adam	CEO Amazon Web Services	S – Sale+OE	$142.41	-12,820	117,703	-10%	-$1,825,634
9	nan	2022-08-17 16:37:19	2022-08-16	AMZN	Zapolsky David	SVP	S – Sale	$145.01	-10,480	60,260	-15%	-$1,519,688

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Source: OpenInsider

Conclusion

It seems AMZN is a short-term sell when looking at market analysis or insider selling. I would not invest in AMZN at this point but wait until the MACD or Fibonacci trendline indicates an opportunity for timing reasons. You can also use RSI to time your exit if you are a day trader. As hinted by the forward-looking guidance that its fundamentals show, the timing for a buy-and-hold investment could start sometime in the second half of 2023. As a result, I would put a hold on this stock for now but recommend a substantial buy as the price potentially increases sometime next year.