Amazon stock forecast after issuing cost warning for Q4

On Friday, Amazon.com Inc. (NASDAQ:AMZN) shares fell by nearly 4% after missing FQ3 expectations on revenue and earnings. The company announced its most recent quarterly results Thursday after markets closed. Amazon also issued a cost warning for FQ4 amid supply chain constraints.

Amazon posted FQ3 GAAP earnings per share of $6.12, missing the average analyst estimate of $8.98. On the other hand, revenue for the quarter grew by 15.3% from FQ3 in 2020 to $110.81 billion, $850 million below estimates. 

The company issued revenue guidance in the range of $130 billion to $140 billion for the holiday season quarter. But warned supply chain constraints could bump the costs higher.

Amazon’s exciting growth

Although Amazon shares trade at steep valuation multiples of 60.07 P/E and 52.14 forward P/E, its growth prospects could gain the attention of long-term investors.

Analysts expect its earnings per share to grow by 81.90% this year, before rising at an average annual rate of about 37.13 over the next five years.

Therefore, with the stock up just 3.24% over the last 12 months, it could be the perfect time to time to bet on the company’s exciting outlook.

Technically, Amazon shares seem to be trading within a gently ascending channel formation in the intraday chart. However, the stock pulled back on Friday after finding resistance at the 100-day moving average. 

Nonetheless, with shares far from reaching oversold conditions, the pullback could continue for the foreseeable future.

Therefore, investors could target extended declines at about $3,174, or lower at $3,028. On the other hand, $3,474 and $3,634 are crucial resistance zones.

Ignore short-term turbulence?

In summary, although Amazon shares continue to trade in a choppy pattern formation, the long-term outlook is still exciting. 

Therefore, although the stock pulled back after finding resistance at the 100-day MA, it could bounce back before reaching oversold conditions, ahead of the busy holiday season.