Amazon.com, Inc.'s AMZN underperformance since its third-quarter report has created an opportunity, with the online retail giant's one-day shipping likely to serve as a trigger, according to Olivetree Financial strategist Dan Forman.
Forman attributed the post-earnings underperformance to the company's exposure to the consumer discretionary sector through ETFs like the Consumer Discretionary SPDR XLY. The shortened holiday selling window this year and the loss of the JEDI Cloud contract to Microsoft Corporation MSFT may also have triggered the downside, he said.
Some fundamental factors such as slowing AWS growth and increased scrutiny of the profitability of the retail business are also being discounted by the stock, Forman said.
The Success Of One-Day Shipping
Notwithstanding the pushbacks, Forman said he expects one-day shipping to drive volumes.
One-day shipping should accelerate Amazon's North American sales growth, but also lead to lower operating income, the strategist said.
"That said, AMZN investors have learned over time that investment cycles typically bear fruit," he said.
Olivetree sees one-day shipping as a near-term catalyst for the stock as the holiday selling season kicks in.
Amazon shares were trading 1.5% higher at $1,772 at the time of publication.
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