Amazon stock: changeover during the first half of 2021
The first six months of the year are now in the rearview mirror. After climbing 330% in the five years leading up to the end of 2020, almost like some kind of meme stock, Amazon shares (AMZN) – Get a report had a less exciting first half of 2021: up “only” 6%.
The Amazon Maven reviews the course of the action since the start of the year, which has been marked mostly by short bursts of rallies and pullbacks, not much by a clear upward or downward trend.
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Amazon’s first half figures
The performance of the Amazon stock over the first six months is shown in the graph below, in blue. Notice how stocks have oscillated, rising in March, April and June, but correcting in February and May. Below are also some interesting metrics on AMZN.
- Absolute annualized back from 12%, well below the S&P 500 annualized 33%.
- Annualized volatility of 31%, a hair above its own historical average of 28% over the past decade.
- Maximum draft of 13%, not bad compared to peers like Apple and other growth stocks.
- Best return month: April, 12%
- Worst return month: May, -7%
Much like some of its tech and growth peers, Amazon stock has kicked off the new year in style. Shares rushed ahead of fourth quarter results, when the company stunned investors with one of the biggest full beats in company history.
Some might blame the announcement of the retirement of famous founder Jeff Bezos for the post-profit liquidation of the stock. The AMZN share price fell 13%, the highest so far in 2021, between earnings day and March 8. But I think macroeconomic forces are the cause.
With the economy reopening and supply chain constraints starting to develop, the market began to fear rising inflation for the first time in many years. The yield on 10-year government bonds skyrocketed while Amazon stocks slumped. Cyclical sectors outperformed growth stocks.
The AMZN rebound came after yields stabilized in mid-March – and the recovery was swift and furious. Between March 8 and April 29, the Amazon share price rose 18%, nearly hitting all-time highs in September 2020.
After Amazon’s monster second-quarter earnings turned old news, the stock started to fall again. In just two weeks, AMZN had lost almost 10% of its value from pre-profit levels. The title went into negative territory for the year.
From that second quarter low, Amazon nearly hit its current price of $ 3,450. The surge in optimism may have been due to valuations becoming much more palatable – a current year P / E in the mid-1960s, which is unusually low for Amazon standards – with no deterioration in fundamentals. .
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Amazon stock rose over 300% in the five years leading up to the end of 2020, and then up 6% (lagging the market) in the first half of 2021. Do you think AMZN is overvalued?
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