Amazon.com, Inc. (NASDAQ: AMZN) shares have advanced more than 14% since the beginning of June 2021, and the current share price stands around $3,719. Amazon’s business continues to grow rapidly, the company increased its guidance for the upcoming quarters, but even this doesn’t justify its current stock price.
Fundamental analysis: Amazon seems to be too expensive right now
Amazon shares continue to be supported after Jeff Bezos left the CEO position, 27 years after founding the e-commerce company. New CEO Andy Jassy expects further business acceleration and higher levels of profitability for the upcoming period.
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According to the latest news, Amazon Prime Video has entered into a licensing deal with Universal Filmed Entertainment Group (UFEG). Under this deal, Amazon Prime Video will have licensing access to UFEG’s library of films and get an exclusive pay-one option for films releasing from 2022.
It is also important to mention that Amazon recently launched at-home COVID-19 tests which are available for $39.99 for U.S. Amazon users aged 18 years and older.
“The Amazon COVID-19 Test Collection Kit DTC has received Emergency Use Authorization from the FDA. The kits are processed by Amazon’s in-house laboratory using the RT-PCR method, a type of nucleic acid amplification test,†Amazon reported.
Bank of America maintains a buy rating on Amazon with a price target of $4,360, while Morgan Stanley analyst Brian Nowak said that shares of this company could be worth $6,000 in 2023. This scenario is too optimistic, but we are witnesses that everything could be possible in this ongoing bull market.
The consensus Wall Street rating on Amazon remains bullish, but Amazon seems to be too expensive right now. Amazon is in a good position to grow its business, but with a $1.88 trillion market capitalization, this stock does not represent an opportunity for long-term investors.
Amazon trades at more than thirty times TTM EBITDA, the book value per share is around $205, and lots of positive expectations have already been included in the stock price. Amazon has never declared or paid cash dividends, and there are better long-term investment opportunities at the moment.
Technical analysis: $3,500 represents the current support level
Technically looking, Amazon shares could advance above the current price levels this July, but the risk/reward ratio is not good for long-term investors. Amazon should continue to do well as a leader in the E-commerce business, but we will probably have opportunities in the future to buy Amazon shares at a discount.
Amazon shares are advancing last several weeks, and for now, the positive trend remains intact. If the price jumps above $3,800, the next target could be around $3,900, but if the price falls below the $3,500 support level, it would be a firm “sell†signal.
Summary
Amazon’s business continues to grow rapidly, but lots of positive expectations have already been included in the stock price. Amazon shares continue to trade in a bull market; still, if the price falls below the $3,500 support level, it would be a firm “sell†signal.
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