Market Overview

Amazon stocks are seen to be regaining their positions as one of the leading assets in the tech sector this January. For the moment, the stocks – which make up one fifth of FAANG -  seem to have the potential to face a mid-term upside.

Amazon has a largely diversified business model which reaches far beyond its original e-commerce profile. As Amazon holds 40% of the e-commerce sector in revenue, this could look like a good launch pad for a possible stock price take off as people became used to such ways of shopping during lockdowns.. This newly highlighted way of shopping may well play into the hands of e-commerce market participants to expand their business in 2022-2023. Moreover, Amazon’s pioneering cloud computing services which are being marketed for business users is also giving it a push to potentially become a leader in this sector. The company may even gain from the spread of the Omicron variant in terms of sales. The Bank of America forecasts that Amazon’s revenue may be up by 22% in 2021, while perhaps gaining an additional 16% in 2022 and 19% in 2023.

From this perspective Amazon’s shares may be seen to be undervalued as they lost almost 13.5% since the middle of November 2021. Technically, Amazon’s stock prices are within the upward trend as they are below $3200, and the recent decline may rather be treated as a strong correction within this trend, and without changing its direction. A classical “hammer” candlestick reverse pattern on the daily chart may also indicate an upside potential of the stock. The lower shadow of the candle has touched the $3123 mark. The first target of the potential rise may be found at $3500, while the second may be at $3700, or 15% up this year. The overall upside potential of the stock may be considered above $4000 or 25% from current price levels given the recent three year forecast of Amazon revenues.

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.