Did Amazon just revive the rebound?

Tony Sycmore
By :  ,  Market Analyst

The share price of Amazon is trading 15% higher in the aftermarket and set to add almost $200 billion to the company’s market capitalization when trading resumes late today.

The gains come after Amazon's cloud computing business beat expectations, and the company increased the price of Amazon Prime Subscriptions. On a side note, a company with pricing power is one of the best hedges again inflation.

While actual Revenue at $137.4 billion narrowly missed expectations of $137.6 billion, the company's Earnings Per Share (adjusted) at $5.80 was significantly higher than the $3.57 expected by analysts.

Putting the icing on the cake, Amazon reported a gain of almost $12 billion from its investment in EV company Rivian. Earnings Per Share, including the Rivian gain, was $27.75 for Q4.

Amazon is the last of the tech giants to report this earnings season. With an almost 7% weighting in the Nasdaq 100, behind just Apple and Microsoft, Amazon's report will restore some much-needed confidence to the tech sector as Apple's earnings report did this time last week. 

Amazon Daily Chart

Amazon's share price closed on Thursday at $2,776.91 per share. Based on the price in the aftermarket, it is expected to open near $3,173 (15% ) when full trading resumes Friday at 9:30 a.m. ET.

$3,175 has been an important horizontal support level for the Amazon share price in the past and is likely to provide initial resistance this evening.

Should Amazon reject $3,175, the risks are for a retest of the recent $2707 low. However, a sustained break/close above $3,175 would see further gains towards $3,320 before $3,450.

Amazon Daily Chart 4th of Feb

Source Tradingview. The figures stated areas of February 4th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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