2022-11-25 13:53:00

Amazon Stock is Down 50% From Its High. Time to Buy?

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Nasdaq
By The Motley Fool

Amazon (NASDAQ: AMZN) shares reached an all-time high of $186.57 on July 8, 2021, amid the COVID-19 pandemic when home-bound consumers flocked to the e-commerce giant for necessities.The company's stock has since fallen 50%, suffering from a stock market sell-off in 2022. Amazon has been hit particularly hard as rises in inflation have led to reduced consumer spending.

With a majority market share in e-commerce and cloud computing, an investment in Amazon seems like a no-brainer. However, as the likelihood of a recession in 2023 rises and Amazon's cloud computing business experiences slowing growth, other companies' stocks look more attractive.

Here's why it's a good idea to hold off on investing in Amazon, despite its significant decline in share price.

Major hits to e-commerce

On Oct. 27, Amazon released its earnings report for the third quarter of 2022. Revenue rose 14.7% year over year to $127.1 billion, missing analysts' expectations by $370 million. Operating income saw a year-over-year decline of 48% from $4.8 billion in Q3 2021 to $2.5 billion in Q3 2022. Most of the company's declines came from its e-commerce business, with revenue dropping by 5% to $27.7 billion in its International segment.

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