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How did Amazon’s share price perform following its hardware event?

Downbeat e-commerce investors hoped that Amazon’s Hardware Event on 28 September might reinvigorate the Amazon [AMZN] share price. Such hopes were unfounded, however, with the Amazon share price slipping 0.45% in its wake.

The event did, however, see the major launch of several new gadgets, including a home robot named Astro. Priced at $999.99 for those invited to buy under a Beta testing program ($1,500 for everyone else), the Alexa-equipped robot can also act as a smart home security guard thanks to (pictured above) Amazon’s Ring technology and has facial recognition technology that can, in theory, distinguish between friends and strangers.

However, according to a developer who worked on Astro, “the person detection is unreliable at best, making the in-home security proposition laughable.” They also told Vice that the wheel-mounted robot would “throw itself down a flight of stairs if presented the opportunity.”

While Dave Limp, senior vice president for devices and service, told Bloomberg “I don’t think at these prices it’ll be for everybody.” CCS Insight’ chief analyst Ben Wood told BBC “I believe the Astro robot will sell out in minutes when it becomes available in the US market.” The robot’s mobility and security features have led some to suggest it could be popular among elderly consumers.

“I believe the Astro robot will sell out in minutes when it becomes available in the US market.” - Dave Limp/BLOCKQUOTE] 

Investors might hope the robot can help out with deliveries. Morgan Stanley cut its Amazon share price target from $4,300 to $4,100 on 27 September following reports Amazon was hoping to hire 125,000 warehouse and shipping workers, in the run-up to Christmas. Morgan Stanley MD Brian Nowak said that despite rising labour costs, Amazon’s growing logistics capability “is set to enable more e-commerce share gains,” new business opportunities and faster shipping. The company has also launched an incubator for trucking start-ups, greater warehouse automation and its air freight capabilities.

 

Robust revenue outlook

Despite its huge size, Amazon’s sales and revenue continue to grow. CNN Money analysts yield a consensus forecast of $52.81 per share for 2021 earnings, 26.25% up from 2020, with this figure expected to grow a further 26.91% to $67.02 in 2022. Sales, meanwhile, are forecast to rise 23.21% from 386.1bn in 2020 to 475.7bn in 2021, then a further 18.50% to 563.7bn in 2022.

Amazon has a well-established moat as the go-to source for online shopping in many countries. It commanded 7.7% of the global online retail market in 2020, more than any other company.

$475.7billion

Amazon's forecasted sales in 2021

  

Despite this, the Amazon share price has trended sideways since September 2020, gaining just 4.97% in the 12 months to 29 September 2021. It has typically ranged between $3,020 and $3,500 during that period, with occasional breakouts either side of these. Short-term traders can exploit this volatility. The current price is well below the 50-day and 200-day moving averages for the Amazon share price.

Analysts remain bullish on Amazon’s stock, with 40 out of 49 polled by CNN Money offering a ‘buy’ rating. Seven rated the stock ‘outperform’ while two rated it ‘hold’. Among the 43 analysts polled offering 12-month targets for the Amazon share price, the lowest estimate of $3,775 represents a 17% increase on the October 5 close of $3,221. The consensus target of $4,100 represents 27% upside, while the high target would see Amazon share price rising to $5,000.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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