Amazon (AMZN) shareholders cashed in on Cyber Monday sales.
Shares of the Seattle-based eCommerce giant shot up 5.3% on the day, posting a gain of $79.27 on the day to $1,581.33 at close, helping buoy the overall market to a post-holiday rebound.
The most obvious movers of price action in Amazon are Cyber Monday sales and anticipated holiday sales through year end, which have been projected for strong gains.
Adobe analytics projects that total online sales will reach $124.1 billion this holiday season, building big on the $108 billion spent in 2017.
As strong jobs numbers and wage growth carry consumer strength through the season, there is little reason to assume customers would have cut shopping spending on Monday.
Investors will anticipate the release of firm figures, but all signs point to a strong holiday which suggests strong profits for Amazon.
Piper Jaffray analyst Michael Olson called the investment opportunity "a champagne stock on a beer budget," prescribing an "Overweight" rating and a $2,050 price target for the stock.
"The tech downdraft has driven valuations to opportunistic levels for certain stocks," he wrote in a note shortly before holiday shopping commenced. "In particular, AMZN presents an opportunity for material appreciation in the coming 12-24 months."
Climbing to the Cloud
For the longer term, the company's diversified profit bases offer a strong buying thesis to both analysts and investors amidst a fourth quarter pullback that has left the stock at a significantly lower valuation than its highs above a $1 trillion market cap earlier in 2018.
Headlining the opportunities is the rapidly accelerating cloud segment, a secular growth driver.
"Trading at just under 60x forward earnings, the valuation [for Amazon] is obviously down significantly from what it was when the stock was hovering in the $2,000 area less than two months ago," Jim Cramer's Action Alerts Plus team explained in a report prior to the shopping spree weekend. "Our [bullish] view is more than justified given not only the proven executional excellence of management, but the exposure to several key end markets, all of which we believe remain in secular growth mode."
Amazon is rated a "One" by the team, indicating a strong buying opportunity.
Wall Street analysts keyed in on the rate of growth in the secular trends the company is tapping into as well.
"Recall, it took 10 years for AWS revenue to climb above $10 billion, while the next incremental $10 billion took only two years (2016-2018)," the team noted. "2019 could mark the first year AWS adds an incremental $10 billion within a single year as cloud and digital transformation becomes a mainstream phenomena driving AWS revenue to $35 billion and operating profits above $10 billion for the first time."
Given the growth rate, the team projected the segment to remain a star even amid a potentially turbulent market ahead.
The only question is whether or not competition from Alphabet (GOOGL) or Microsoft (MSFT) puts a lid on the company's trajectory. For now, the cloud computing pie seems big enough to satisfy all three tech behemoths, with Amazon enjoying the largest slice.
Technical Turning Point
The technicals point to the possibility of a late year rally to continue, something that the options market appears to be setting its sights on as well.
"Yes, the price of AMZN could go lower, but the broad market is now poised for a year-end rally and I would anticipate that AMZN participates," Real Money technical analyst Bruce Kamich wrote in his column on Monday morning. "Prices may not go onto new all-time highs, but we could see a retest of $1,800 to $1,900 area in the weeks ahead."
Such a run would mark a nearly 20% premium on Monday's close.
To be sure, not all were so certain the charts held good news for the bulls.
"There is nothing in Amazon's chart at present to suggest that is about to start trending up in the near term," James "Rev Shark" DePorre wrote in his own take on the retail giant. "If you are interested in playing Amazon now the best approach is to keep a stop around the recent lows."
Shares have pared back gains slightly in post-market trading.