The January 23% Stock Price Increase of Amazon and Why

Last month, the stock price increased due to changes in market sentiment and many announcements.

Why did this occur

Amazon’s (AMZN 7.38%) stock price soared last month on the back of a general uptick in technology companies’ share prices and a series of operational updates that set the stage for Amazon’s return to profitable growth. S&P Global Market Intelligence reports that the stock price increased by 23% by the end of January. That’s a load of crap

An important factor in Amazon’s performance last month was the 11% increase in the Nasdaq. The Federal Reserve raised the federal funds rate on February 1 by only 25 basis points, the smallest increase in over a year as investors expected the Fed to continue slowing the pace of its interest rate hikes in response to the easing inflation.

Amazon, a cyclical corporation with a high value, stands to gain if interest rate hikes are slowed and a major economic downturn is avoided.

There were a number of company-related headlines that collectively seemed to boost the stock price. At first, Amazon indicated that the 10,000 layoffs it had already announced for November would be increased to 18,000.

 

However, the stock market usually responds positively to layoffs because investors see them as a sign that a company is taking steps to reduce expenses.

Amazon also said that it would let any U.S.-based vendors who met the program’s criteria to participate in its Buy with Prime initiative. Through the Buy with Prime initiative, third-party online merchants can provide Prime members with free shipping and returns on purchases made through their listings.

 

The move significantly increases Amazon’s potential customer base for its logistics services, which could have a material impact on the company’s bottom line.

Lastly, the firm stated that they would be include RxPass, a pharmacy benefit, in Prime so that customers could get common generic prescriptions delivered to their door for a fixed monthly charge of $5. Despite layoffs and other cost-cutting measures, Amazon is expanding its ecosystem with Buy with Prime and RxPass.

So what

Investors expect Amazon’s stock to rise after hours on Thursday when the company reports its fourth-quarter profits, just as Meta Platforms’ shares did the day before. As a result of the difficulties Amazon is facing, analysts predict only 6% top-line growth and a significant decline in profitability, which could provide a low bar to vault over.

With today’s rise, Amazon stock has risen by more than 40 percent from its December low, signaling a major change in investor mood. If the stock is to continue rising, the fundamentals will need to strengthen.

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