MarketsJan 11, 2022
Can Amazon wake up from its 2021 nap?
Tech Laggard
Victor Lei
Discover
Investing in Amazon was a snooze in 2021 — its stock only up 2.3% on the year — way short of the S&P 500 average.
It was also the worst-performing tech giant compared to Alphabet, Meta and Apple. But Amazon’s temporary weakness may be offset by its long-term potential.
Amazon is many things — a successful cloud provider (AWS), streaming giant (Prime) and the fourth largest ad platform, on top of being an online retail behemoth — which brings in over 75% in sales, but also brought down its stock.
In 2021, Amazon’s retail business was hit on all fronts:
And it was difficult for 2021 sales to top the turbocharged 2020 sales numbers from COVID.
Amazon also underperformed compared to other e-commerce giants — Shopify, Ebay and Etsy — which had returns of over 20% in 2021.
To tackle its supply chain and hiring issues, Amazon plans to spend an additional $4B in the final quarter 2021 — erasing its earnings.
But Amazon has long expected these issues — investing billions into its logistics network — $38B spent in 2019 and $61B in 2020:
Amazon’s new CEO, Andy Jassy, has a lot to handle after Jeff Bezos’ departure in 2021 — adding more uncertainty to investing in Amazon.
With markets expected to be rocky throughout 2022 — investors could benefit from holding strong stocks — Amazon being a top candidate.
Amazon ranks as a top pick among many banks, including Jefferies, Bank of America Global Research and RBC Capital Markets (Per CNBC).
Watch: Amazon’s next quarterly report expected on Feb 1. expects 4-12% growth — down from 43% during its COVID peak.
