Amazon's Stock May See A Sharp Decline Following Results

seekingalpha2023-04-24

SummaryAmazon will report results on April 27 after the close of trading.An options trader is betting that shares will fall following the results.Free cash flow from operations is the key to where ...

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Comments

Vincent1968
2023-04-24
Vincent1968
Can anyone advise, usually how accurate is the prediction?
Karen333
2023-04-24
Karen333
He must have a crystal ball. I wish I could get one as well when I go to the casino. Nobody knows what the price will be in the short term. However, in the long term, the chances of it being a higher price with healthy returns year on year depends on the value of the company, the business metrics, the competitive positioning and the management amongst other things. Amazon is a long term buy - short term fluctuations are irrelevant to the long term value investor. If you want short term gains - go to the casino.
- Tigaa:
  ookk
- KarenBaek:
  🙏👌
- bernardtayet:
  OK
- JN84:
  ok
TigerHulk
2023-04-24
TigerHulk
Flee before it's too late. Good luck folks

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However, an options trader is now betting that the stock has reached a short-term peak and will fall over the next month.The company is scheduled to release its earnings report on April 27, and it is expected to be a challenging quarter. Analysts predict a 13.5% decline in earnings to $0.46 per share compared to last year, while revenue is forecasted to increase by 7.1% to $124.7 billion. Amazon's guidance for the next quarter is equally important, with analysts expecting revenue growth of 7.3% to $130.1 billion.Earnings and sales estimates for the full-year 2023 have decreased over the past six months, with an expected 8.7% decline in earnings to $2.42 per share and an anticipated 8.1% increase in revenue to $555.76 billion. However, if Amazon can maintain its revenue growth, there may be room to reduce expenses, leading to better-than-expected earnings and an increase in full-year estimates. This outcome depends heavily on factors such as labor costs.BloombergHowever, the overall performance of Amazon's business may not be the only deciding factor, especially if Amazon Web Services (AWS) fails to meet expectations. As the most profitable segment of Amazon's business, AWS generates most of the company's operating income. Analysts project a 13.7% constant currency growth rate for AWS, reaching $21.0 billion and representing 16.9% of the total business revenue. The unit is also expected to deliver $5.2 billion in operating income, with a 24.5% operating margin. On the other hand, the operating income for the entire Amazon company is expected to be only $2.9 billion, indicating that the rest of the business is anticipated to operate at a loss.Trading at 42 times earnings, the stock could be considered expensive. However, it has never been evaluated solely based on its price-to-earnings ratio. Instead, its cash flow from operations over the past twelve months is a more relevant metric. Free cash flow from operations tends to be a leading indicator for the direction of the stock over time.BloombergThe stock trades at just 22.7 times free cash flow from operations on a twelve-month trailing basis. This is at the lower end of the historical range, implying that the stock may be undervalued over the longer term.BloombergDespite the stock's recent significant increase, it is possible that it could experience a pullback, mainly if Amazon reports disappointing results due to higher costs, a weakening consumer, or if AWS fails to meet expectations.This may be driving an options trader to make a bearish wager, with the open interest for the May 19 $105 puts and calls increasing by around 20,000 each on April 20. The data shows that calls were sold for $4.30 to $4.50 per contract, while the puts were bought for approximately $5.40 to $5.55 per contract, resulting in a spread transaction cost of between $0.95 and $1.25 per contract to create the bearish trade. The trader requires the stock to trade below $103.75 by mid-May to earn a profit, and the trader paid over $2 million in premium to create the spread transaction.The trade may be profitable based on the technical setup, which suggests that the stock could be topping out. A rising wedge pattern is forming in the stock, which is a bearish reversal pattern, and may have completed the throw-over portion of that pattern on Friday. If the stock falls below support at around $102, it could lead to a decline in the stock to about $95, representing a 61.8% retracement of the upward move from the low of March 13. This would result in a decline of around 9%.Trading ViewAssuming Amazon can maintain its progress in improving free cash flow from operations, any temporary decline in the stock price is unlikely to be sustained in the long term and may present a long-term entry point.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":9947086735,"gmtCreate":1682349267727,"gmtModify":1682349273158,"author":{"id":"3586393315819735","authorId":"3586393315819735","name":"Vincent1968","avatar":"https://community-static.tradeup.com/news/7f106edb1e06baf3c68462c050422f46","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Can anyone advise, usually how accurate is the prediction?","listText":"Can anyone advise, usually how accurate is the prediction?","text":"Can anyone advise, usually how accurate is the prediction?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9947086735","repostId":1159435957,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9947005019,"gmtCreate":1682317383631,"gmtModify":1682317388855,"author":{"id":"4106699629777400","authorId":"4106699629777400","name":"Karen333","avatar":"https://community-static.tradeup.com/news/5a24d4a63169cc05795b5cf99d8bb3bc","vip":1,"crmLevel":6,"crmLevelSwitch":0},"htmlText":"He must have a crystal ball. I wish I could get one as well when I go to the casino. Nobody knows what the price will be in the short term. However, in the long term, the chances of it being a higher price with healthy returns year on year depends on the value of the company, the business metrics, the competitive positioning and the management amongst other things. Amazon is a long term buy - short term fluctuations are irrelevant to the long term value investor. If you want short term gains - go to the casino.&nbsp;","listText":"He must have a crystal ball. I wish I could get one as well when I go to the casino. Nobody knows what the price will be in the short term. However, in the long term, the chances of it being a higher price with healthy returns year on year depends on the value of the company, the business metrics, the competitive positioning and the management amongst other things. Amazon is a long term buy - short term fluctuations are irrelevant to the long term value investor. If you want short term gains - go to the casino.&nbsp;","text":"He must have a crystal ball. I wish I could get one as well when I go to the casino. Nobody knows what the price will be in the short term. However, in the long term, the chances of it being a higher price with healthy returns year on year depends on the value of the company, the business metrics, the competitive positioning and the management amongst other things. Amazon is a long term buy - short term fluctuations are irrelevant to the long term value investor. If you want short term gains - go to the casino.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":15,"commentSize":4,"repostSize":0,"link":"https://ttm.financial/post/9947005019","repostId":1159435957,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":106332648,"gmtCreate":1682342792222,"gmtModify":1682342795542,"authorId":3581628714216264,"author":{"id":3581628714216264,"authorId":3581628714216264,"name":"Tigaa","avatar":"https://static.tigerbbs.com/511cd46dca932fd5c090897fbe554dc9","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9947005019,"type":1,"supId":0,"prevId":0,"content":"<u>ookk</u>","text":"<u>ookk</u>","html":"<u>ookk</u>"},{"id":106332454,"gmtCreate":1682329949397,"gmtModify":1682329955563,"authorId":4095401657476740,"author":{"id":4095401657476740,"authorId":4095401657476740,"name":"KarenBaek","avatar":"https://static.tigerbbs.com/50a018faf1fdccd959bcd5ad11c8bde1","vip":1,"crmLevel":5,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9947005019,"type":1,"supId":0,"prevId":0,"content":"<span class=\"s1\">🙏👌</span>","text":"<span class=\"s1\">🙏👌</span>","html":"<span class=\"s1\">🙏👌</span>"},{"id":106332431,"gmtCreate":1682329452898,"gmtModify":1682329459094,"authorId":3583377018896117,"author":{"id":3583377018896117,"authorId":3583377018896117,"name":"bernardtayet","avatar":"https://static.tigerbbs.com/43e8c1fc37a4bff2a94af98953cff267","vip":1,"currentWearingBadge":{"badgeId":"44212b71d0be4ec88898348dbe882e03-1","templateUuid":"44212b71d0be4ec88898348dbe882e03","name":"Boss Tiger","description":"The transaction amount of the securities account reaches $100,000","bigImgUrl":"https://static.tigerbbs.com/c8dfc27c1ee0e25db1c93e9d0b641101","smallImgUrl":"https://static.tigerbbs.com/f43908c142f8a33c78f5bdf0e2897488","grayImgUrl":"https://static.tigerbbs.com/82165ff19cb8a786e8919f92acee5213","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.29","exceedPercentage":"60.71%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1101},"crmLevel":4,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9947005019,"type":1,"supId":0,"prevId":0,"content":"OK","text":"OK","html":"OK"},{"id":106332419,"gmtCreate":1682328935785,"gmtModify":1682328941996,"authorId":3587002200443166,"author":{"id":3587002200443166,"authorId":3587002200443166,"name":"JN84","avatar":"https://community-static.tradeup.com/news/cef70538fafbb895b202f1509787e0f9","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9947005019,"type":1,"supId":0,"prevId":0,"content":"<u>ok</u>","text":"<u>ok</u>","html":"<u>ok</u>"}],"langContent":"EN"},{"id":9947002215,"gmtCreate":1682316970037,"gmtModify":1682316975796,"author":{"id":"4111448269923362","authorId":"4111448269923362","name":"TigerHulk","avatar":"https://community-static.tradeup.com/news/7e7eab37ff9d954e24641370934ae3c0","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":6,"crmLevelSwitch":1},"htmlText":"Flee before it's too late. Good luck folks","listText":"Flee before it's too late. Good luck folks","text":"Flee before it's too late. Good luck folks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9947002215","repostId":1159435957,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":13,"commentSize":0,"repostSize":3,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1159435957"}