Is Amazon shares a buy after the share split?

Online giant Amazon completed its share split last weekend. Instead of $ 2,447 as on Friday, Amazon traded “only” for just under $ 122 the following Monday. The share split was completed in a ratio of 1:20, so invested investors now have 20x as many shares in their portfolio. The Amazon stock looks visually cheaper, making it more interesting for private investors. However, the company’s value and market value have not changed during the share split.

At first, the stock reacted kindly, but already on Tuesday it went down again. Yesterday’s closing is $ 116.15. As US futures are falling this morning, the stock should start trading a little lower today. A survey conducted by, among others, Goldman Sachs creates a bad mood. The goldmen have lowered the share price target to 170 USD, which still corresponds to a price potential of 46 percent. In addition, the overall market weakness weighs on Amazon stock. Both the ECB’s interest rate decision announced yesterday and today’s release of US inflation figures are disturbing markets.

The weak overall market is slowing the recovery

Inflation figures are a risk factor, as inflation is expected to remain high. According to consensus estimates, analysts expect inflation to be unchanged from the previous month of 8.3 percent year-on-year. Investors have popped up after coverage over the past few days and have initially made a profit. As a result, the weak overall market also pulled down Amazon shares.

Since the mid-day Pentecost Monday of around $ 129, the stock has again lost ten percent. However, the visual reduction in the price of Amazon shares should attract more shareholders in the medium term. The stock has become more attractive after the share split, especially for private investors. Since the start of the Amazon stock correction in mid-November, the price has already fallen by about 45 percent. As a result, the expected P / E ratio for 2023 has fallen to only 25. The share is therefore cheaper than it has been for a long time.

Amazon: Chart Technical Outlook

As we can see in the attached chart, the stock price correction ended right at the strong horizontal support zone between $ 102.60 and $ 99.60. Here are the highlights from 2018 and 2019. Based on the massive support, the share price was able to start a dynamic recovery rally. From the low of 101.60 to the last local high of $ 129.00, the Amazon price rose by 27 percent. However, the stock price jumped from the 50-week moving average and is now retiring again.

Interested investors could look for stabilization in the zone between 50% retracement ($ 115.28) and 61.8% retracement ($ 112.08). However, if the price falls below the $ 107.00 mark, the massive support zone may be tested again. Amazon stocks, on the other hand, should only have bullish ambitions again when the 50-week line ($ 127.20) is exceeded at the weekly closing price. The next targets are then at USD 134.00, USD 138.80 and USD 144.40.

Amazon stock: Buy option after stock split?


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