Amazon Stocks: 2008 Recession Discount Appears (NASDAQ:AMZN)

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AMZN 5 Year Stock Price

Buy Amazon (NASDAQ: AMZN) now. Let’s go. That’s it for the article. For real.

Buyers of AMZN stock at current levels are seeing the most extreme discounts ever. Pre-pandemic levels when the company was reporting revenue of $280.52 billion and net income of $11.58 billion. Instead, investors are getting an early Christmas present for this upcoming decade of his at a -51.02% discount. It is projected to achieve record-breaking top and bottom lines of $72.922 billion and he $4.435 billion respectively by fiscal year 2025. These numbers represent impressive normalized CAGRs of 17.2% and 25%. While significantly slower than the ultra-pandemic levels of 29.4%/69.6% and pre-pandemic levels of 27.3%/69.7%, we are not at all concerned. $55.04 billion by FY2025, compared with $21.65 billion in FY2019.

come. No matter what others say, these numbers are impressive!Macroeconomics improve after Mr. Market dispels extreme recession concerns about his AMZN normalized sales and his AWS segment and if a return is demanded, he will come to his senses on his own accord. These are temporary headwinds at best.

Mr. Market is too drunk on recession fears to ignore AMZN’s capabilities

On its recent third quarter 2022 earnings call, AMZN reported revenue of $127.1 billion. Nonetheless, his EBIT margin of 2% and net profit margin of 2.3% continue to be compressed relative to past runs, creating near-term headwinds as the company grapples with rising operating costs. I’m here. Notably, $5.55 billion of stock-based compensation for the quarter represents a notable QoQ growth of 6.73% and a YoY of 74.52%. This could explain the low EPS of $0.28, but it should highlight his beat against $0.20 in consensus expectations.

Additionally, analysts worry AMZN’s AWS growth is slow at 4.05% QoQ and 27.43% YoY, reporting lower operating margin of 26.3% compared to 30.29% in Q2 2021 doing. Subscription revenue also slowed to 2.18% QoQ and 9.33% YoY. Worsening currency headwinds, coupled with management’s comments that future sales growth will slow, shook the market, resulting in a sharp -16.97% decline in the share price since the company’s Q3 2022 earnings release. No wonder.

That said, investors shouldn’t forget the second Prime Day, Thanksgiving and Christmas sale that has always been a big boost to AMZN’s performance. In Q4 2021, the company reported impressive growth of 24% quarter-on-quarter and 9.4% year-on-year. In comparison, the Q4 2019 levels were 24.93%/20.8% respectively. Of course, we do not expect to see similar numbers in Q4 2022. This is in view of the impending recession and higher oil/gas prices during the difficult winter ahead. However, with an estimated QoQ growth of 14.9%, there is good potential for decent growth. This points to great potential for a gradual inventory recovery going forward, even as YoY comparisons become tougher.

The -$4.97 billion free cash flow in Q3 2022 may also disappoint some investors and analysts, but it will take time to scale back capital spending as directed by management at the time. It is important to note that it takes Especially during these uncertain economic times.

On the other hand, keen investors are advised to closely monitor AMZN’s debt utilization. By the third quarter of 2022, long-term debt was $65.62 billion and annual interest expense was $2.15 billion, representing notable year-over-year increases of 17.47% and 23.56%, respectively. The company can clearly pay off much of its debt with his $35.18 billion worth of cash on the balance sheet and a significant amount of cash, but the total debt/EBITDA ratio has increased to 2.59 times his Also be careful. Fortunately, the maturities of these debts have been significantly staggered to 2062, lending much-needed help to that liquidity through the potential recession ahead.

Growing FUD has clearly undermined Mr. Market’s hopes for accelerated growth going forward, as AMZN’s top and bottom lines have been significantly cut by -10.97% and -47.06% respectively. These resulted in moderated his CAGRs of 11.6% and 7.4% against pre-pandemic levels of 27.3%/69.7% and hyper-pandemic levels of 29.4%/69.6%, respectively. Again, EPS of $4.05 remains significantly improved from FY2019 levels of $1.15 and FY21 levels of $3.24. Remember that the increase in the COVID-19 pandemic is an anomaly and does not represent the best baseline for comparison.

In addition, investors expect AMZN’s profitability to grow from 5.2%/4.1%/7.7% in FY2019 to 5.3%/7.1%/-3.1% in FY2021 and finally to 7.7%/6.1%/7.5% by FY2025. Predict %. His net debt situation will also eventually improve from -$31.6 billion in FY2019 to -$19.69 billion in FY2022, eventually reaching $109.54 billion by FY2025. . It thereby shows the company’s huge amount of cash on its balance sheet. Why are short-term recessions so depressing?

In the meantime, we encourage you to read our previous articles on AMZN. It will help you better understand AMZN’s positioning and market opportunities.

• Amazon: One Ring to Rule Them All – Improving Profitability Going Forward
• Amazon is a jack of all trades and growing at all costs

So is AMZN stock a buy?sell, or hold?

AMZN 5-Year EV/Revenue and P/E Rating

AMZN is currently trading at 1.90x EV/NTM earnings and 64.47x NTM P/E, below the five-year averages of 3.23x and 88.67x respectively. The stock is also trading at $92.12, down -51.02% from a 52-week high of $188.11 and approaching a 52-week low of $92.01. Nonetheless, the consensus estimate remains bullish on AMZN’s outlook given the price target of $143.58 and a 55.86% rise from the current price.

If you need more encouragement than the above, we also introduce the fact that AMZN stock is well below its 50-, 100-, and 200-day moving averages. Assuming minimal retracement going forward, AMZN’s stock could also drop into the $80s, making the stock surprisingly cheap to his 2018 levels of dirt cheap.

Many say that past performance is no guarantee of future results, as seen in the market-wide collapses we have witnessed. But it’s also important to note that we’re in the middle of a bear market and probably already in the middle of a recession. The stock plunged -57.11% from $4.36 to $1.87 in August-November 2008 when recession fears peaked, but by April 2009 it had recovered all those losses. , which rose sharply to $98.30 throughout 2018. It is clear that in 15 years he receives a gift that can only be given once. Still, only opportunistic investors with moderate risk tolerance and very long-term trajectories would dare to invest during times of greatest pain.

Therefore, we rate AMZN stock as a buy. Prepare yourself for retirement. There is no better time than these rock bottom levels.