Amazon Surges from $1,700 to $3,000 Amid E-commerce Boom

Amazon: From $1,700 to $3,000 as E-commerce Booms

Amazon traded between $1,700 and $2,100 when much of the world was locked down at home. The thesis for investing in Amazon was simple: the company sought to hire 100,000 people in the United States because orders had skyrocketed and, according to its author, it was selling three times more than two months prior. The conclusion drawn then was blunt: the stock would reach $3,000 and then $4,000 shortly. Time, with nuances, partially vindicated the forecast.

The Thesis of Triple Sales and $4,000

The reasoning started with a calendar. Amazon had been oscillating between $1,700 and $2,100 and hit highs in mid-February, just as all markets began to fall. Not depending on physical stores, the lockdown did not hit it negatively; it boosted it upward. First-quarter results would only reflect the last stretch of confinement, so the real jump would come with second-quarter sales, anticipated to be brutal.

Hence the prediction of a strong rally, proportional to tripling orders, targeting $3,000 and then $4,000. The idea was summed up in one phrase: if this peine with any other stock, it would be called overheating; since it is Amazon, it is called analysis.

Is a P/E of 80 a Matter of Faith?

Here the first clash began. For one participant, a P/E above 80 is a matter of faith: the market pays for it today expecting future profits. The bullish response was that the current multiple is far lower than what the company had when it went from $1,000 to $2,000, and that P/E has ceased to be a sacred number.

The counterattack came with uncomfortable comparisons: Apple at a P/E of 20, Google in the same zone, and Microsoft near 30. The differential is too large between equally good companies, and it takes just one quarter missing expectations for the stock to drop 30% instantly. This already peine to Apple, which fell even with record profits because the bar for expectations was set even higher.

The Argument That Backfired: IAG

There was mockery toward those holding airlines and beaten-down stocks. The bankruptcy of an IAG group low-cost carrier seemed to close the debate. It closed it in the opposite direction. According to calculations made in the thread, since April 17, IAG rose from €2.50 to €2.98, a 20% gain, while Amazon moved from $2,375 to $2,653.98, an 11% rise. Those labeled as lost investors were generating nearly double the return.

It is not a definitive argument, because a short period does not measure a long-term thesis. But it deflates the sarracena superiority of those handing out investor cards from the bar counter.

Amazon in Spain: €7.567 Billion and 157 Million Deliveries

Domestic numbers fueled optimists. Amazon generated revenue in Spain of €7.567 billion, 70% more than a year earlier, and tripled the turnover of its direct competitor, an Asian online retail giant that stayed at €2.129 billion. El Corte Inglés, third in the race, billed €1.320 billion in the last fiscal year. Amazon's market share reached 15.7% compared to 4.4% for the second-ranked player, with 157 million annual deliveries.

To this was added the news, still unconfirmed by the company, of a new logistics center in Onda, Castellón, on plots of 200,000 square meters. The local detail reinforces the expansion thesis, although it says nothing about the price at which it is advisable to buy.

When the Shoeshine Boy Recommends Amazon

The most cited signal did not come from a balance sheet. Many started seeing broker ads on YouTube encouraging buying Amazon shares, even on university classroom computers and among industrial machinery videos. The old adage floated: when the shoeshine boy recommends a stock, it is time to sell. With the stock above $3,100, massive advertising pushing fractional shares looked, to some, more like distribution than opportunity.

AWS, the Cloud, and the Unresolved Question

For a shareholder, the business that truly makes money is not the shopping cart, but AWS: that is where the margin lies. And there arises the doubt that left the debate open: with the crisis looming, would companies continue paying Amazon to be their cloud, or would there be a halt? Added to the list were Amazon Pharmacy, the prescription drug service, and AWS Private 5G for internal corporate networks, presented at its annual conference. A long-term shareholder admitted his doubt: outside the cloud, Amazon continues to lose money in Europe.

The trail goes cold right there. The stock surpassed $3,000, the $4,000 thesis remained pending, and the growth forecast was left exposed: we will see in these years if the growth is the same.