Amazon gets "underperform" rating! Share price plummets amid inflation!

According to foreign media reports, Exane, a French bank, recently gave Amazon (AMZN.US) an "underperform" rating. The bank said that Amazon's future road will be very bumpy due to soaring inflation and increased spending.

Exane analyst Stefan Slowinski said that massive investments in distribution centers amid a tight U.S. labor market during the pandemic, as well as employee bonuses to keep warehouses staffed, will erode Amazon's profit margins.

According to Refinitiv data, of the 58 brokerages covering Amazon, 20 rate the stock as a “strong buy,” 36 rate it as a “buy,” one rates it as a “hold” and one rates it as a “sell.” The median price target is $4,000.

It is learned that during the outbreak of the epidemic, Amazon achieved huge growth due to consumers' high reliance on online shopping. However, as the epidemic improved and consumers returned to physical stores, Amazon's growth rate began to slow down.

It is worth noting that in a highly inflationary environment, consumers are also cutting back on discretionary spending, while companies are facing rising costs for raw materials, procurement, and transportation. Under the influence of multiple difficult factors, Amazon's stock price has fallen again and again.

It is reported that earlier this year, Amazon's stock price fell by as much as 20%, and as of the close of March 29, the stock price had only risen by 1.6%. On March 30, Amazon's stock price fell again, falling to $3,354 per share.

Stefan Slowinski added that Amazon's operations will be hit in the future because the company will not respond to inflation by raising prices for many products. In addition, Amazon also needs to allocate capital expenditures for its cloud business to achieve 30% market share from competitors.

Editor ✎ Nicole/

Disclaimer: This article is copyrighted and may not be reproduced without permission.