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Hold AMZN? Why One Analyst Is Neutral on the E-commerce Titan’s Stock

April 26, 2022
Barton Crockett
TheStreet

After two years of unanimous buy ratings, bearishness has reached Amazon  (AMZN). First, we had BNP Paribas’s sell recommendation. Now we have a "hold" rating from Rosenblatt Securities analyst Barton Crockett.

Along with the hold, Crockett has assigned AMZN a $3,000 price target.

With other analysts calling Amazon 2022's ultimate internet stock, who's right? Will inflation loosen Amazon's long-lasting hold on the online retail industry?

E-commerce: The Reason to Sell

Rosenblatt Securities believes Amazon won’t be able to stand its ground against continuing inflation. Crockett’s main argument lies in the fact that retail is a very competitive industry with much constrained margins that make it impossible for any of the players to roll price increases over to consumers.

Although I personally agree that inflation will trim Amazon’s profitability, I don’t believe competition will play a decisive role in the process, for two main reasons:

  1. Amazon’s competitors will also struggle because of inflation. And they will bleed even more because they do not possess a business unit like Amazon Web Services (AWS) to compensate for their losses.
  2. Amazon has already proven its ecosystem works in terms of locking customers in. The company had 37% of the U.S. e-commerce market in 2017. That number was 41%, in 2021.

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Hold AMZN? Why One Analyst Is Neutral on the E-commerce Titan’s Stock
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