How much are the megatech companies on the nose with investors?
For an answer take a look at what happened to the market value of Amazon shares on Tuesday as they slumped more than 5% to well under $US100 each.
That took the closing price to $US96.79 at which level the company’s market value had fallen under the $US1 trillion level for the first time in two and a half years – since April, 2020 when the price was surging in the great post pandemic lockdown rally and start of the Covid online bonanza.
What makes Amazon’s fall more astonishing is that much of it has happened in the past five days – since its weak September quarter report and especially weak performance by its AWS cloud computing business and an equally weak sales outlook for this quarter which is the online retailers biggest with the Thanksgiving and Christmas gift giving seasons.
Amazon shares are now down close to 19% since the quarterly report was issued after hours last Thursday.
“Combined with wobbles on revenue momentum for both AWS and Retail, and suddenly the Amazon hiding place doesn’t look good,” Bernstein analyst Mark Shmulik wrote following Amazon’s Thursday afternoon earnings report. “The good news here is that the story isn’t broken, it’s just pushed out into 2023 while Q4 may get worse before it gets better.”
Amazon’s pandemic low was $US83.83, so the shares are in the neighbourhood of falling back to that level if the current investor unease continues.
Among the big American companies only Meta Platforms shares have fallen back to and then under their pandemic lows – a real sign of its current confused state.
While analysts are quick to blame this fall on the way investors are moving back to value stocks, the Dow’s recent rally seems to have been based on relief, not on fundamentals with the Fed about to lift its key interest rate yet again.
The strong US dollar is making life tough on the revenue and earnings lines of quarterly statements for the megatechs especially which are global businesses and have to ride the currency train every day, through every up and down.
