Posted on July 19th, 2021
Amazon.com (AMZN) saw substantial growth this past year, outperforming the S&P 500 and rising by approximately 93.4% compared to the S&P’s gain of about 35% and reaching record highs over the past couple of weeks. Despite hedge funds selling, the stock rose on the WhaleWisdom Heatmap to a ranking of twelve.
Amazon is a multinational technology company with a powerful presence in e-commerce and the cloud computing market. The company also offers digital streaming services and artificial intelligence solutions. Amazon Web Services includes machine learning services and supporting cloud infrastructure to aid its customers in increasing productivity and improving business outcomes. As a result of the coronavirus pandemic, more businesses sought to move away from internal management of technology infrastructure and moved to the cloud. Understandably, Amazon saw a boom in business during the coronavirus pandemic. Stay-at-home government orders led to increased online shopping, greater demand for streaming entertainment, and a push towards remote work.
Hedge Funds Adjust Portfolios
Amazon lost some traction in the first quarter of 2021, as hedge funds and institutions were decreasing shares in their portfolio. The aggregate 13F shares held by hedge funds decreased to about 56.4 million from 56.3 million. Of the hedge funds, 44 created new positions, 298 added to an existing holding, 62 exited, and 271 reduced their stakes. Overall, institutions were selling and decreased their aggregate holdings by about 0.8% to approximately 287.2 million from 290.0 million. The long-term 13F metrics between 2001 and 2021 demonstrate that Amazon’s investment potential maintains on an upward trend. The company saw a rise in ranking on the WhaleWisdom WhaleIndex to a rating of twelve from thirty-six.
Encouraging Multi-year Estimates
Analysts expect to see earnings rise over the next two years, increasing from 2021 to 2022 from an estimated $55.13 to $72.60. Revenue estimates were also highly encouraging, with consensus forecasts reaching $489.6 billion by December 2021 and $576.5 billion by December 2022.
Favorable Outlook from Analysts
Analysts appear to recognize Amazon’s strength in the e-commerce market, sharing optimistic price targets and opportunities for future growth. Tigress Financial Partners’ analyst, Ivan Feinseth, maintained a Buy rating on the stock and initiated a twelve-month target price of $4,370. Doug Anmuth of JP Morgan Chase & Co. views Amazon as a top pick, giving it a $4,600 target price and an Overweight rating. Anmuth believes that Amazon’s e-commerce penetration will continue to increase. However, despite optimistic stock values, Amazon must also work through leadership changes as its founder, Jeff Bezos, is replaced by Andy Jassy.
Optimism Beyond 2021
Amazon ushers in a new CEO in 2021, though the potential impact of leadership change has not stopped analysts from being optimistic for the future. Customer demand for Amazon’s products and services remains very strong, and the technology company continues to see upward growth. Multi-year earnings estimates should be strong enough to continue to attract long-term investors.