I am assigning Amazon (NASDAQ: AMZN) a negative risk/reward rating based on a heightened risk of underperforming consensus estimates in the coming quarters, an elevated valuation, and the possibility of a historically low return growth investment cycle. That being said, for blue-chip growth-oriented investors, Amazon would make for an attractive investment opportunity at the right price.
In this article I breakdown Amazon’s recent business performance and place it in a historical perspective to draw conclusions about the likely pathway forward. I then compare these estimates to current market expectations to quantify risk before turning to the valuation and the technical backdrop to formulate a strategy for the shares.
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