Amazon.com Inc
Amazon.com, Inc. (NASDAQ: AMZN) provides a range of products and services to customers. The products offered through its stores include merchandise and content that it purchased for resale and products offered by third-party sellers. It manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and it develops and produces media content.
Recent Financial and Business Update:
- Strong Sales Growth: In the second quarter, net sales demonstrated significant growth, rising by 11% to reach USD 134.4 billion, as compared to the USD 121.2 billion recorded in the second quarter of 2022. When accounting for the unfavourable impact of USD 0.3 billion resulting from year-over-year fluctuations in foreign exchange rates throughout the quarter, net sales still exhibited an impressive 11% increase in comparison to the same period in 2022. Within the North America segment, sales saw a noteworthy 11% year-over-year uptick, reaching USD 82.5 billion. In the International segment, sales also experienced growth, increasing by 10% year-over-year to USD 29.7 billion. The AWS segment displayed a 12% year-over-year rise in sales, reaching USD 22.1 billion.
- Significant Operating Income Growth: Operating income for the quarter expanded significantly to reach USD 7.7 billion, a notable increase from the USD 3.3 billion recorded in the second quarter of 2022. Notably, the North America segment reported an operating income of USD 3.2 billion, a significant improvement compared to the operating loss of USD 0.6 billion in the second quarter of 2022. In contrast, the international segment reported an operating loss of USD 0.9 billion, an improvement from the operating loss of USD 1.8 billion in the second quarter of 2022. The AWS segment reported operating income of USD 5.4 billion, compared to the USD 5.7 billion in the second quarter of 2022.
- Notable Recovery in Net Income: Net income for the second quarter reached USD 6.7 billion, equivalent to USD 0.65 per diluted share, which marks a notable recovery from the net loss of USD 2.0 billion, or USD 0.20 per diluted share, incurred in the second quarter of 2022. Additionally, the second quarter of 2023 saw a pre-tax valuation gain of USD 0.2 billion from the common stock investment in Rivian Automotive, Inc., whereas the second quarter of 2022 recorded a pre-tax valuation loss of USD 3.9 billion from the same investment.
- Robust Cash Flow Improvements: In terms of cash flow, the trailing twelve months ending in June 2023 exhibited substantial improvements. Operating cash flow increased by an impressive 74% to reach USD 61.8 billion, compared to USD 35.6 billion for the trailing twelve months ending in June 2022. Free cash flow similarly displayed a positive trend, transitioning from an outflow of USD 23.5 billion in the trailing twelve months ending in June 2022 to an inflow of USD 7.9 billion for the trailing twelve months ending in June 2023. Furthermore, free cash flow, excluding principal repayments of finance leases and financing obligations, improved from an outflow of USD 33.5 billion to an inflow of USD 1.9 billion in the same comparative periods. Similarly, free cash flow, after excluding equipment finance leases and principal repayments of all other finance leases and financing obligations, improved from an outflow of USD 26.1 billion to an inflow of USD 6.7 billion in the trailing twelve months ending in June 2023, as compared to the trailing twelve months ending in June 2022.
Technical Observation (on the daily chart)
The Relative Strength Index (RSI) over a 14-day period stands at 35.77, downward trending approaching towards oversold area, with expectations of some more downward momentum. The next important support level is around USD 115- USD 120 levels. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance levels.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The reference date for all price data, currency, technical indicators, support, and resistance levels is September 26, 2023. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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