A steep fall in the Amazon share price was the big story of the day on the Nasdaq exchange after the tech giants earnings disappointed the markets.
Amazon’s pandemic-related record-breaking profit run came to a screeching halt after the company said it would experience a slowing of sales growth in the next few quarters due to the easing of lockdown restrictions. Despite earning $113 billion in revenue (versus a consensus of $115 billion), the pessimistic forward guidance gave investors a reason to take profits off the stock’s climb for the year, resulting in a steep 6.62% drop as of writing.
Amazon’s online shopping platform and cloud computing business had seen a considerable boost in 2020 as the coronavirus pandemic forced workers to operate from home, while government lockdowns forced shoppers to opt for online platforms with closure brick-and-mortar shopping outlets. As vaccinations increase and economies reopen, old shopping habits are returning, leaving companies like Amazon at the receiving end of the reversal of fortunes.
The steep drop in Amazon share price was long in coming, with the progressively lower double tops of 13 July and 26 July pointing to a “failure swing” situation. The drop on the day smashed through the 3494.46 neckline along with support levels at 3435.00 and 3400.00 (psychological and 25 June low). The 3347.32 support is presently at risk, and a drop below this level could extend the decline towards 3300.43 or 3253.66.
On the flip side, a bounce on the 3347.32 support allows the Amazon share price a chance to recover lost ground, with 3435.00 and 3494.46 being the immediate recovery targets. The recovery of the uptrend follows price, beating the 2021 high at 3773.08.