Amazon Live Earnings Call Forecast Risk Analysis. We make the call here right now! In this article available on the Blog it was disclosed our price target.
The question investors might have is whether it is worth to remain invested in Amazon through earnings. Herein, we answer to this question for long term investors in Amazon also addressing the risk.
I confess not every client is fan of Amazon, i.e. some have emotional issues buying the stock given its valuation. We do not force anyone to buy or sell a stock they do not feel comfortable with. This is against our policy. However, we do share our personal opinion which sometimes might diverge among team members.
Mine is related to my experience investing in Amazon in the service Collaborative Live Trading. Although I wanted to sell short Amazon shares I have been long the stock. My idea is that Amazon can get to $486-483, and if it beats a price above $500 is not out of question. The chart below illustrates the risk of remaining long Amazon - blue line represents long term support on the chart. Currently, support is far away from existing price therefore the easier is to 'advise' sell and make questions later.
Personally, I do not see any problem with this approach. It is obviously the one containing less risk, which also explains Vieira's recent post on this matter - free trade alert in Amazon ahead of earnings.
Nevertheless, my approach is different. I am willing to assume the risk remaining long the stock through earnings. Until then if shares get to $483-486 I intend to sell a percentage.
Hopefully I have been clear on this matter. An investor has always to make difficult decisions. My aim is not to be right all the time, but to invest in the long term often taking advantage of momentum even if I dislike what I see. Like I said before, there is always the alternative of not participating, but earnings is part of the game as it is volatility.
Our team idea behind this decision is Amazon this quarter still has good reasons to beat earnings estimates based on web services high growth rate. I think that Bezos likely to remain focused on this area disregarding other components less successful.