Despite what some hedge fund managers might say, there’s very little surety surrounding any investment made on the stock market. People who put their money in industry giants like Amazon usually insulate themselves from the worst of the market fluctuations, but the first few weeks of 2016 aren’t proving that to be the case.
Speaking to CNBC, Evercore ISI Analyst Rich Ross predicted that Amazon’s stocks could see even further losses than the company has already stomached in the first days of the new year. Amazon shares have lost nearly 15 percent of their value since Jan. 1, and Ross sees the retailer’s future as a viable, blue-chip buy in jeopardy if the 150- and 200-day moving averages show downward trends.
“It sounds like a lot, but when we look at the chart, given the magnitude of this 125 percent move in conjunction with the false breakout to a fresh new high and the volatility in the broader market, another 10 percent on a break below 150-day is really not unreasonable,” Ross told CNBC. “In the meantime, the trend is still higher, despite this pullback, and we continue to hold the moving average, which is defined support throughout the advance. In the absence of a break below that level, we would expect to continue along that trend.”
The sudden downturn may still be perplexing Amazon executives, as the company was one of the few in retail in 2015 that saw its shares roughly double compared to its 2014 numbers. Investor confidence is a fickle beast, though, and Amazon may simply be reaping what its success sowed last year.
Regardless, the share devaluation isn’t coming at the most opportune time for Amazon. The retailer is pouring more and more resources into its drone delivery program, while also dabbling in experimental shipping methods, like flying its own cargo planes and partnering with bicycle couriers in emerging markets. That Amazon’s Wall Street woes could slow its momentum on some, or all, of these projects remains to be seen.