Amazon.com Inc. (AMZN) is trading lower on Wednesday despite beating Q4 2020 top and bottom line estimates by wide margins. The e-commerce juggernaut earned $14.09 per-share during the quarter, better than $7.15 per-share estimates, while revenue rose a staggering 43.6% year-over-year to $125.6 billion, beating consensus by nearly $6 billion. Jeff Bezos announced his departure as CEO during the release, replaced by current head of Amazon Web Services Andy Jassy.
Q4 Blowout Results
Operating income rose 77% year-over-year to $6.87 billion vs. $1.0 to $4.6 billion guidance. Amazon Web Services (cloud computing) posted another strong quarter, growing 28% year-over-year to $12.74 billion. CEO Bezos capped off the blowout quarterly report by issuing upside Q1 guidance, now expecting revenue of $100 to $106 billion vs. $95.5 billion prior expectations while looking for operating income of $3.0 to $6.5 billion.
Susquehanna raised the firm’s price target to a Street-high $5,200 after the news, commenting, “Business trends remain strong and should continue to do so in 2021. Paid units growth was extremely strong again at 47% year-over-year, demonstrating the accelerating shift to e-commerce. The 1Q guide was also nicely above expectations for revenue and profitability, showing no signs of slowing down after a huge holiday season.”
Wall Street and Technical Outlook
Wall Street consensus now stands at a ‘Strong Buy’ rating, based upon 41 ‘Buy’, 7 ‘Hold’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $3,048 to a Street-high $5,200 while the stock opened Wednesday’s U.S. session more than $600 below the median $4,100 target. This stark under-performance, compared to price targets, suggests that investors still view Amazon as ‘fully-valued’.
The stock broke out above 2018 resistance at 2,550 in April 2020 and rallied to an all-time high at 3,552 in September. Price action then eased into a symmetrical triangle pattern that remains in force, more than five-months later. The blowout fourth quarter report has barely moved the price needle, suggesting that Amazon remains extremely overbought after 2020’s 76% return, even though its already spent months working off technical extremes.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.
This article was originally posted on FX Empire