Amazon Stock Slips as Gloomy Outlook Overshadows Strong Earnings

Amazon.com, Inc. (NASDAQ: AMZN) shares dropped sharply in premarket trading on Friday, February 7, 2025, despite reporting stronger-than-expected quarterly earnings. The e-commerce giant's stock fell 7.9% to $169.50, as investors reacted to the company's light current-quarter guidance and a bearish engulfing pattern on its chart.

Amazon's fourth-quarter 2024 results, announced on Thursday, February 6, 2025, showed net sales increasing 10% to $187.8 billion, with operating income rising to $21.2 billion. However, the company's revenue growth of 10% year-over-year was below the 11% increase analysts had forecasted. Additionally, Amazon's guidance for the current quarter was lower than expected, indicating a potential slowdown in growth.

The company's earnings call revealed that AWS segment sales increased 19% year-over-year to $28.8 billion, but the growth rate for the current quarter is expected to decelerate. This news, combined with the bearish engulfing pattern on Amazon's chart, contributed to the stock price decline.



Investors should monitor four key support levels to assess Amazon's potential recovery:

1. $170: This level is likely to attract buying interest near a confluence of support from the rising 200-day MA and an established uptrend line that joins several prominent swing lows between December 2022 and October last year.
2. $161: This location may find support around a late January peak that formed several days before the Feb. 2 earnings breakaway gap.
3. $145: If Amazon's shares fail to hold the $161 level, investors should watch for a decline to $145, where buyers may seek entry points near a trendline that links the major August 2022 and September 2023 price peaks with a period of narrow consolidation in November and December last year.
4. $123: A deeper correction may see the shares test the $123 region, where they could encounter support from a horizontal line connecting numerous peaks and troughs between July 2022 and October 2023.

Despite the recent market reaction, analysts maintain a strong bullish sentiment on Amazon's long-term prospects. The average analyst price target for Amazon stock is $253.95, with a low estimate of $205 and a high estimate of $306. This average target predicts an increase of 6.33% from the current stock price of $238.83. The consensus among analysts is a "Strong Buy" rating, indicating that they believe Amazon is likely to perform very well in the near future and significantly outperform the market.



In conclusion, Amazon's stock price decline following its earnings report reflects investors' concerns about the company's light current-quarter guidance and the bearish engulfing pattern on its chart. However, analysts remain bullish on Amazon's long-term prospects, and investors should monitor key support levels to assess the company's potential recovery.