Amazon Stock Price Prediction: Do Not Panic, Amazon’s Stock Can Still Hit $2,500

motek 1This Amazon stock price prediction article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Do not panic. Amazon’s stock will recover from investors’ misplaced fear over the effect of the COVID-19 epidemic. This is incorrect, AWS is why AMZN is highly-valued.
  • AWS is not affected by infectious diseases. Amazon’s e-commerce business is also protected against supply-chain disruption.
  • My fearless forecast is that AMZN can hit $2,100 within the next 90 days. My one year price target for this stock is $2,500.
  • COVID-19 is a minor setback. Amazon Logistics has its own global fleet of planes, container ships, trucks, vans, and bikes/trikes. 
  • Amazon’s 1-day delivery service further increases its leadership in e-commerce.

Amazon Stock Price Prediction

Stay calm. The coronavirus-related big sell-off last February 24 should be seen as an opportunity to buy on the dip. Amazon (AMZN) and other mega-cap companies saw their stocks suffer a massive drop last Monday. Like coronavirus, investor panic is contagious. Learned investors should go contrarian. Go and buy the AMZN shares that are being dumped by panicked investors. 

(Source: Statista)

The chart below sadly illustrates the investing public’s overreaction to COVID-19.  

Google (GOOGL) and Facebook (FB) are mostly into digital advertising. They have little  exposure to coronavirus-inflicted factory closures in China. The irrational fear of some investors meant FB AND GOOGLE alsosuffered multi-billion dollars’ worth of stock price drops.  Investors likely got scared over WHO’s warning that COVID-19 “has the potential to become a global pandemic.”

Big and small investors are prone to herd mentality. More so if journalists disseminate panic-inducing news clips. The bottom line is that COVID-19’s probability of becoming a global pandemic is small. Gilead’s (GILD) Remdesivir is proving effective in curing patients infected with COVID-19 coronavirus. Several companies in the U.S. And the United Kingdom are already coming up with vaccines against COVID-19.  The U.S. Senate is proposing a budget of $8.5 billion to help in the fight against COVID-19. I believe China’s government is spending much more than this amount already in rushing cures and vaccines to stop COVID-19.

I expect COVID-19’s spread to eventually fizzle out by April or early May. Consequently, I expect AMZN to rise back to above $2100 within the next 90 days. Those investors who panicked will eventually come to their senses and realize that Amazon’s growth story remains intact. Going forward, COVID-19 will not hinder AMZN’s path towards  $100 billion/quarter revenue. 

(Source: MacroTrends)

Stay calm and exploit this temporary market anxiety. AMZN is a bargain buy when it trades below $2,000.  The COVID-19 outbreak did not stop Morgan Stanley analyst Brian Nowak from proposing a $3,000 bull case for AMZN. My $2,500 1-year price target for AMZN is higher than the median PT made by Wall Street analysts (tracked by TipRanks). 

(Source: TipRanks)

AMZN has a strong historical data of getting higher than 100x P/E ratio. AMZN’s P/E valuation this week is less than 87x. This can go to 92x or higher by next month. Chinese or American professionals only needs to announce an official cure or vaccine for COVID-19. This can also happen if an expert from WHO (World Health Organization) categorically declares that COVID-19 has little chance of becoming a global pandemic.

(Source: MacroTrends)

Investors should realize that COVID-19 is not going to stop Amazon from fulfilling the online shopping experience of its more than 105 million U.S. Amazon Prime members. Buying AMZN while it trades below $2,000 is judicious. Sooner than later, institutional will again rally behind AMZN and push it to $2,500.

Investors will remain steadfast in support of AMZN because Walmart (WMT) is  still not disrupting Amazon’s dominance of North America e-commerce.

(Source: Amazon)

Amazon’s E-Commerce Business Is Vaccinated

Yes, COVID-19  is a near-term headwind for every company that sources out products from China’s factories. However, Amazon is well-equipped for any kind of scenarios. Leaked e-mails revealed Amazon is ordering off-cycle products that are made in China. This is to prevent any supply-chain problem arising from COVID-19 outbreak. Amazon touts a closed ecosystem. It doesn’t rely too much on others for its logistics and inventories. 

Strong sales over the years helped Amazon build 175 fulfillment centers/warehouses around the world. The combined size of those warehouses is 150 million square feet. Further, Amazon Logistics has leased and/or bought its own shipsplanes, trucks, vans, and trikes. Having its own network of warehouses and transport vehicles means Amazon is not vulnerable to UPS or FedEx shutting down their operations. 

Amazon’s wholly-owned subsidiary, Beijing Century Joyo Courier Service Co, supervises the transit of cargo containers from China’s ports to U.S. ports. Amazon’s vast numbers of sea, air, and land vehicles is why Amazon is now capable of completing 1-day deliveries.  Prime subscribers remain loyal to Amazon because of its 1-day delivery. 

Conclusion

Amazon’s e-commerce business is safe from COVID-19. This new infectious disease also has little effect on Amazon’s most important income growth driver, AWS. Do not panic, Amazon Web Services is still on track to deliver more than 25% CAGR for the next five years. AMZN flies higher every time management reports record quarterly revenue for AWS. AWS is responsible for more than 65%of Amazon’s quarterly operating income. AWS is safe from COVID-19. Consequently, AMZN’s long-term prosperity is secure. 

(Source: Statista)

More importantly, high valuation of AMZN is largely because of AWS’ resilient leadership in cloud computing.  Azure and Google Cloud are still well behind AWS in terms of global market share. AWS will likely retain its more than 30% market share for many years to come. 

My fearless forecast is that AMZN can shoot up to $2,500 if AWS’ quarterly revenue hits $11 billion. This is highly probable. The cloud computing infrastructure service market is growing at more than 30% CAGR.

Lastly, the panic selling last February 25 did not deter I Know First from giving AMZN a very bullish signal for AMZN. The one year trend score of Amazon’s stock is 238.43. It indicates a high probability that AMZN will likely trade well above its current price of $1,979.59.

How to interpret this diagram.

Past Success With Amazon Stock Price Prediction

I Know First has been bullish on Amazon stock price in past forecasts. On October 23, 2019, the I Know First algorithm issued a bullish prediction for AMZN stock. The algorithm successfully forecasted the movement of the Amazon’s shares on the 3-months time horizon. Amazon’s shares rose by 6.73% in line with the I Know First algorithm’s forecast. See chart below.

This bullish Amazon stock price prediction was sent to the current I Know First subscribers on October 23, 2019.

Here at I Know First, one of the top fintech companies in the industry, our stock forecast algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing daily stock market forecast, including S&P 500 forecastforex forecast, gold price forecast and, in particular, Apple stock forecast. Additionally, we provide the latest Apple stock news. Today, we are producing daily forecasts for over 10,500 assets. These stock market predictions generated by our machine learning trading tool are used by institutional clients, as well as private investors and traders to identify the top stock picks in the market and exercise the traded faster than the other market players.

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