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Why Amazon's One-Day Shipping Could Be A Good Reason To Buy The Dip

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Why Amazon's One-Day Shipping Could Be A Good Reason To Buy The Dip

Amazon.com, Inc.'s (NASDAQ: 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 (NYSE: XLY). The shortened holiday selling window this year and the loss of the JEDI Cloud contract to Microsoft Corporation (NASDAQ: 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. 

Related Links:

Swoosh!: Amazon Loses Nike

SunTrust: Internet Stocks Outperforming S&P 500

Photo courtesy of Amazon. 

Latest Ratings for AMZN

DateFirmActionFromTo
Feb 2020MaintainsBuy
Feb 2020MaintainsBuy
Jan 2020MaintainsBuy

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Posted-In: AWS Dan Forman e-commerce Olivetree FinancialAnalyst Color Analyst Ratings Tech Best of Benzinga

 

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