Amazon.com, Inc. (AMZN) Shares Might Be Overheated

For the period that ended November 15, 2019, the short interest in Amazon.com, Inc. (NASDAQ:AMZN) stock is on the up. The 10.79% rise could be an indication that investors and traders expect a drop in the share price, often as a result of a drop in the business’ fundamentals. The average brokerage opinion at 1.7 suggests disposing off these shares. Between October 31 and November 15, the total count of shorted shares totalled 3.81 million. That number was 371,010 more shares compared with the total of 3.44 million shares in the space of prior two weeks, which suggests more traders or funds are betting that the company stock will move down. The average daily volume for AMZN at the November 15th settlement retreated to 2,487,632, versus 3,464,843 at the October 31st report. That led days to cover to move at 1.530736, a 53.07% increase compared to the 1 days to cover recorded at the prior short interest data release.

On December 03, 2019, Amazon.com, Inc. (NASDAQ:AMZN) shares lost -0.65% or -11.64 points to close at $1769.96 with a heavy trading volume of 3.381 million shares. It opened the trading session at $1760, the shares rose to $1772.87 and dropped to $1747.23, the range by which the price of stock traded the whole day. The company now has a market cap of $886 billion and currently has 500.67 million outstanding shares. Amazon.com, Inc. (AMZN) stock has plunged -1.2 percent of market value in 21 trading days.

AMZN stock’s trailing 3-year beta is 1.53, meaning there will be a greater rate of return, although posing a higher risk. The part of a firm’s profit given to each outstanding share of regular stock was $22.29 share in the trailing 52 weeks. The stock’s value surged 17.84 percent year to date (YTD) compared to a rise of 4.72 percent in 52 week’s period. The firm’s shares are still trading -13.06 percent below its 1-year high of $2035.80 and 35.42 percent up from 52-week low of $1307.00. The average consensus ranking on the company is 1.7, on a ranging where 5 is equal to a consensus sell rating. In other words, the mean analyst recommendations are ranking this stock as a buy.

Amazon.com, Inc. (AMZN) is most likely going to rise 22.46 percent in the coming 12 months, as per price target approximations compiled by finviz. Nevertheless, they have set the price target at a $2573.4-month high price target. This represents a whopping 45.39 percent increase from the current trading of shares. The 52-week median price target given by the analysts is $2180, which means a return possibility of 23.17 percent in comparison with the closing price of the stock of $1769.96 on December 03. The lowest price set for the stock is $1850 — just above 4.52 percent from AMZN share price now.

Past records have indicated that shares in Amazon.com, Inc. rose on 20 different earnings reaction days and we have yet to see whether this trend will play out and remain in place when the company reports upcoming earnings. Investors will get the next hint of AMZN’s Q4 earnings on February 01. Analysts are predicting revenue to climb 18.7 percent to $85.9B in the financial fourth quarter, while EPS will soar by about -33.61 percent to $4.01 per share. In the last quarter, it earnings of $5.22 per share came better than the $4.67547, adjusted, expected by Thomson Reuters consensus estimate. Revenue for the quarter was $69.98B, topping the $68.72B analysts had expected. Earnings are seen to rise by 335.7 percent this year, 31.48 percent in the coming year and the trend continues by 72 percent every year in the next 5 years.

Let’s take a glimpse at some insider activity at Amazon.com, Inc. (NASDAQ:AMZN) and observe the pattern. The earliest insider trade happened on 11/20/2019. WILKE JEFFREY A parted with a total of 1 thousand shares of the firm at average share price of $1748.04. The total amount for the sale was set at $1.75 million. On completing this exchange, the CEO Worldwide Consumer account balance was 41.34 thousand shares. The stock grew 1.92 percent from that insider sale. On 11/15/2019, WILKE JEFFREY A, CEO Worldwide Consumer, did a sale of 3.48 thousand shares at a price of $1745.57 per share. This got rid of 6.07 million shares from the insider’s fortune and the stock experienced a 2.06 percent rally in price since the news became public. This exchange saw 41.34 thousand shares get out from the CEO Worldwide Consumer account.

On 11/15/2019, CEO Amazon Web Services Jassy Andrew R recorded a sale transaction valued at $5.66 million. The sale at $1752.18 a share has eliminated 3.23 thousand shares from the insider’s portfolio position. Meanwhile, shares price witnessed 1.68 percent increase since the transaction reporting date. The company insider is left with 102.79 thousand shares remaining in the account. Blackburn Jeffrey M, who works as Senior Vice President at the company, performed a sale of 3.57 thousand shares in a transaction worth $6.26 million. The disposal recorded on 11/15/2019 was priced at $1752.23 per share. The stock price soared 1.68 percent since the transaction. Blackburn Jeffrey M currently holds a stake of 67.46 thousand in AMZN stock which is worth $119.4 million after the insider selling.

The stock is lingering around the initial support level of $1753.84. After this, the following support is at the zone of $1737.71. Up until the time the AMZN stock hit levels beyond the current one, bulls should have no alarm. In terms of its momentum, the stock’s RSI hit 50.08 on the daily chart, and this may be a cause for concern. In case the price goes below $1737.71 level on closing basis, there may be more profit booking with the stock growing weaker. Still, getting to the $1779.48 level may cause a pull-back move approaching $1788.99 mark.

Amazon.com, Inc. (AMZN) shares are trading at a P/E ratio of 78.9 times earnings posted in the trailing 12 months. The industry AMZN deals with has an average P/E of 48.7. Its P/B ratio is standing at 15.6X compared to the 10.3 industry average. It is additionally sporting a 3.4 on the Price-to-Sales ratio, compared to the industry’s P/S average of 3.4. Amazon.com, Inc. has a 41.1% gross profit margin, with its operating margin around 5.4%. Alongside this, the company’s net profit margin currently stands at 4.3%.