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Amazon Falls Back

After rallying more than 30% over recent months, Amazon shares have fallen back in recent days following a mixed set of Q4 earnings. While revenues were seen higher over the quarter, at $149.2 billion vs $145.7 billion expected, EPS came in below expectations at $0.03 vs $0.17 expected. The company noted a mild lift in advertising spending over the quarter, though this was offset by weaker web services revenues. However, it wasn’t necessarily the weaker earnings that wobbled investor sentiment but a softer set of guidance for Q1. Looking ahead, Amazon forecast Q1 revenues in the $121 billion - $126 billion region, a little light on Wall Street’s $125 billion estimates.
 

Cutting Costs

Sales in stores were down by 2% year on year with Amazon citing higher inflation (higher consumer prices, higher energy, and transport costs) as the key downside factor here. Last month, the company noted it will cut around 18000 jobs globally in a bid to cut costs, this follows previous cuts in November along with a freeze on new hiring as the company seeks to address its balance sheet.
 

Fed Impact

Amazon shares have also come under pressure this week amidst a pullback in US stocks generally in response to hawkish Fed commentary. Bumper December jobs data in the US has potentially opened the door to a longer course of Fed tightening which is causing some downside, especially for tech stocks near-term.
 

Technical Views

Amazon

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The rally off last year’s lows saw price breaking out above the 103.36 level. However, the move has since reversed with the price trading back below the level for now. Near-term, this is a key pivot price for the stock with bulls needing to see a quick move back above the level to keep the focus on 123.79. Below here, there are risks of a move down to 84.28 especially with momentum studies weakening.

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