Amazon ended Q1 with a very sluggish increase in revenues, +7% to $16.4B in the last three months of the past year – the slowest year-over-year expansion rate since 2001. Earnings per share, which was below forecasts, was penalized by the $ 7.6 billion loss generated by the investment in Rivian. The forecasts for the second quarter are below expectations. Revenues are estimated at between $116 and $121 billion. The range of the operating income is very wide, ranging from a loss of one billion dollars to a profit of 3 billion. In Amazon’s case, therefore, both the results and the outlook penalizes the stock.
Amazon.com [AMZN.N], which closed on Friday with a -1.4% to $2,295, in pre-trading the stock dropped 0.3% to $2,288. This has characterized Amazon’s equity story since summer 2020 between the resistance at $3,700 and the support at $2,880 (violated and recovered several times) seems to be a distribution phase. The stock took our target at $2,500 and subsequently also the one at $2,300. A rebound is now likely given both the doji candle generated last Friday and the key level reached: 61.8% of all the uptrend generated by the Dec 2018 lows (~$2,250). What to do? We close the short and carefully monitor the stock. A break at the close and with a volatility of $2.250 would open SHORT again towards $2,100 and $2,000 points. The alternative is to wait for a rebound towards $2,500 and then open the short.
We recommend a multiday operation: go SHORT on the stock, upon closing below $2,250, by buying the Leverage Shares Amazon -1X ETP (ISIN: IE00BKT66S86) with a short-term target towards $2,100. Alert/stop loss should be above $2,300 (closing daily).
