Why Amazon Stock Jumped 23% in January ?

Shifting market sentiment and several announcements lifted the stock last month.

Amazon’s (AMZN 7.38%) share price rose last month as the company witnessed a broad rebound in tech stocks and made a series of business announcements that appeared to position the company to return to profitable growth. rose.

The stock rose 23% in his January, according to data from S&P Global Market Intelligence.

Broader market tailwinds are a big driver of Amazon’s profits, with the Nasdaq up 11% last month. Inflation continues to fall, and investors expect the Federal Reserve to continue its slowdown in rate hikes, raising the Fed Funds rate by just 25 basis points on Feb. 1, the slowest in almost a year. It’s been a profit. As a cyclical company that trades at high valuations, Amazon will benefit if rate hikes slow and the economy avoids a deep recession.

As for the company itself, there has been some news that seems to have boosted the stock price. First, Amazon said it would expand layoffs announced in November from 10,000 he said to 18,000. Layoffs mean real people lose their jobs, but they often lead to higher stock prices because they show companies are keeping costs down.

Amazon also announced the launch of its Buy with Prime program to all eligible sellers in the United States. The Buy with Prime program allows online retailers on non-Amazon platforms to add the Prime badge to their deals and offer free shipping and returns to Prime members. The move could dramatically expand the addressable market for Amazon’s logistics services and make a big difference to its bottom line.

Finally, the company announced that it will be adding his pharmacy perk called RxPass to Prime. This allows customers to ship popular generic drugs for a flat rate of $5 per month.

Both Prime and RxPass purchases show that Amazon continues to grow its ecosystem while cutting costs through layoffs and other moves.

What now

Amazon’s fourth-quarter earnings report is due after Thursday’s close, and investors seem to think the stock will rise after Meta Platforms did the same following yesterday’s earnings report. . Analysts expect revenue to grow just 6% and revenue to decline sharply, which could lower the hurdles for the company to overcome, but also highlights the challenges facing Amazon. I’m here.

In today’s rally, the stock is up about 40% from its low in December last year, marking a dramatic shift in sentiment for Amazon stock. For stocks to continue to rise, fundamentals need to improve.