Amazon Stock Price Soars on Record Holiday Sales, Company Crosses $1 Trillion Valuation

on Jan 31, 2020
Updated: Apr 3, 2020
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  • Earnings: $6.47 per share vs market expectations of $4.04 a share
  • Sales: $87.4 billion vs $86 billion expected
  • Amazon has now more than 150 million paid Prime members globally
  • Stock price likely to continue marching higher

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Shares of the e-commerce giant Amazon soared in after hours trading Thursday after the company crushed analysts estimates for fourth-quarter profit. This caused the stock to surge 10% in after hours trading and ultimately cross the $1 trillion valuation, thus joining the exclusive $1 trillion group consisting of Apple, Microsoft, and Alphabet.

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Fundamental analysis: Record holiday sales 

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The company reported earnings of $6.47 per share, while market analysts expected $4.04 a share. A year ago, Amazon reported earnings of $6.04 per share. 

Amazon also reported record quarterly sales of $87.4 billion, more than 20% higher than $72.3 billion reported a year ago. Analysts expected the company to generate $86 billion in sales for the fourth quarter.

Moreover, Amazon said that it has more than 150 million paid Prime members globally. 

“Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world. We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” said CEO Jeff Bezos. 

Amazon Web Services (AWS), a subsidiary of Amazon that provides on-demand cloud computing platforms, reported an increase of 34% in sales compared to a year ago. AWS competes with Microsoft’s Azure and Google Cloud Platform in this field. 

Amazon said it expects to generate between $69 billion and $73 billion in sales for the next quarter, which is in line with market expectations of $71.6 billion.

Technical analysis: Fresh all time high likely to happen

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The Amazon stock price trades at $2055.50 in premarket trading session after hitting $2113 following the release of Q4 earnings. The all-time high, printed in September ‘18, is at $2050.50, hence, there will be no surprises when the fresh high is set today. 

Amazon stock price daily chart (TradingView)

As seen in the chart above, the Amazon stock price is well-supported between $1,700 and $1,800 by the 200-DMA, and the ascending trend line (the 200-DMA). The premarket push higher will create a gap that leaves the price action outside the wedge. 

Hence, an open and daily/weekly close above $2,055 will pave the way for more gains. This level also offers a good entry for those seeking to buy Amazon stock. The next target for the bulls is $2,260. 

Summary

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Amazon crushed market expectations for the fourth-quarter on record holiday sales. As a result, the stock price trades around 10% higher and is likely to open at an all-time high. The bulls will now push the price toward the next major resistance around $2,260.

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