Amazon ended the first quarter with a very sluggish revenue increase, +7% to $ 116.4 billion in the last three months of last 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 yesterday +4.65% at $2.891, collapsed by -9% to $2,631 in pre-trading. It could be a distribution phase, which is yet to be demonstrated. However, it characterized Amazon’s equity story from summer 2020 between the resistance at $3,700 and the support at $2,880 (repeatedly violated and recovered). Negative results could also break the support at $2,700, which would give a bad signal and open towards $2,500.
We recommend a multiday operation: go SHORT on the stock, upon closing below $2,700, by buying the Leverage Shares Amazon -1X ETP (ISIN: IE00BKT66S86) with a short-term target towards $2,500. Alert/stop loss should be above $2,800 (closing daily).