The drop in Amazon shares we’ve seen could be just the beginning, especially as concerns mount over the costs facing the tech giant and the growth potential of its top line of business, an analyst at Amazon has warned. veteran tech.
“In our mega-cap coverage, we believe Amazon is in the least advantageous position due to its exposure to headwinds that have generated cost inflation and have the potential to slow consumption,” Jefferies technology analyst Brent said. Thill, in a note to his clients. “We show that a bearish scenario of $60 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) at a minimum multiple of 9 times would produce a stock of $51, implying ~45% downside. compared to current levels.
Thill, who reiterated a long-term Overweight (Buy Equivalent) rating on Amazon, citing its leading position in e-commerce, added that “investors need to be confident that operating income estimates have bottomed out before stocks can mark a turning point.”
The flow of news about Amazon has fueled a bear market in recent months.
On October 27, Amazon missed analysts’ estimates for the third quarter as growth in its main line of business continued to cool and costs remained high. For the fourth quarter, Amazon estimated revenue of between $140 and $144 billion, instead of the $155 billion that analysts had projected.
The next day, the shares suffered a drop of almost 10%.
Earlier this month, Amazon began laying off 10,000 workers in an effort to rein in its cost structure.
However, the shares have continued to fall: in November they are down another 10%.
“Now the macro economy is starting to affect fundamental analysis of Amazon and we are cutting estimates by 20-30% in 2023 and 2024 operating income,” EvercoreISI technology analyst Mark Mahaney wrote in a recent note.
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