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On Friday, after the publication of its results, Amazon lost 7.5% over the session. This is its second biggest drop in ten years*.

One would expect an unpredictable event, off the radar, that would have caused such a jolt…
Here is the answer given by Brian Olsavsky, the CFO, during the call: “COVID has been impacting our numbers strongly upwards since Q2 2020. This now makes year-overyear comparisons tricky. And this phenomenon will continue for several quarters”. So, surprised?
As a result, the revenue forecast for Q3 is $108bn. That’s down from Q2. Sequentially down – I’m repeating myself but it seems important: this stock is valued as if it were the Appolo rocket.
How could the 31 financial analysts** who follow Amazon stock have missed this? How could they?

For a year, Amazon was in an ideal situation: no more competitors (because stores were closed) and ideal customers since we were all stuck at home. This allowed the company to reach high volumes. Now, the competitors have reopened, people are out, and you have to compare yourself to high numbers.

If you don’t understand how it’s possible that none of the 31 analysts have considered this phenomenon, join me in the club of those who doubt their value-add. Perhaps we should find another name for them.

To conclude on Amazon, one point to keep in mind: Andy Jassy, Jeff Bezos’ replacement who arrived only a month ago, did not deign to come and present his results to the shareholders (unlike the CEOs of Apple, Microsoft, Alphabet or Facebook).

 

Have a good week,
Charles

 

* The first one was on March 12, 2020, at the height of the COVID: when the SP500 index was losing -9.5% on the day, so the context was totally different.

** The analysts are the financial analysts of big banks, who make the market.

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