Week 3: Noah Bard - Amazon's Historic Day

 The two day stretch starting on February 3rd was a wild time for the FAANG companies. On February 3rd, one of the FAANG companies, Facebook, had the largest market cap loss in a single day. This came after a drop in ad-revenue growth, decreased daily users, and a shrunk moat due to competition from TikTok and others. Facebook's parent company Meta dropped 26% in a single day. Although the looming bear market didn’t last for long as Amazon's earnings crushed expectations.

On Friday, Amazon’s shares surged 13.5% during futures trading, and that continued when the market opened. They closed the day at a record 14% increase. They added $190 billion to their market cap, and beat the previous record held by Apple. This new gain put their total market cap to an impressive $1.6 trillion.

To my knowledge, this came as a major surprise. Amazon regularly outperforms analysts expectations during their quarterly earnings, and nothing was new this time. Amazon launched their advertising campaign to increase their revenue, but this had been public knowledge, so it should’ve been factored into expectations. I believe there were two main reasons why Amazon surged like it did. Firstly, they raised their prime subscription by 17% and although you might think that this would discourage consumers, in reality it showed the utility of Amazon. In a covid-19 hit economy people are still willing to pay more than ever for amazon's delivery service, it’s impressive. Secondly, Amazon has been in a flat/bear trend for months now, and hasn’t seen its usual pop. This earnings release gave investors a reason to once again, believe and buy into Amazon which sent the stock surging.

What do you think?



Sources: https://www.reuters.com/business/amazon-surges-eyes-wall-street-record-gain-value-2022-02-04/

Comments

  1. AnonymousFeb 8, 2022, 5:39:00 PM

    That's insane. I've never seen an event like this happen, and this shows how powerful people are. This event also shows the will of people and how important delivery services are in today's world.

    ReplyDelete

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