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Amazon Appoints New Cloud Chief – Shares Tumble

Shares in e-commerce giant Amazon.com, Inc. (AMZN) slipped 1.61% Wednesday after the company announced it had hired Tableau CEO Adam Selipsky to head its AWS cloud business. Selipsky, a former Amazon executive, replaces Andy Jassy, who is taking over from founder Jeff Bezos as CEO later this year.

The appointment comes at a critical time as more companies continue to move from local storage to the cloud – a trend that has accelerated during the pandemic as remote working took hold during shutdowns. Currently, Amazon controls around 34% of the cloud market share according to Synergy Research Group, per the Wall Street Journal. Moreover, the company’s cloud division continues to drive earnings, bringing in $51 billion in annual sales last year and growing 30% in the fourth quarter. In total, the unit accounts for around 10% of Amazon’s revenue.

Through Wednesday’s close, Amazon stock has a market value of $1.56 trillion and trades nearly 60% higher over the past twelve months. However, the shares have eased 5.22% since the start of the year. From a valuation standpoint, the stock trades at about 61 times projected earnings – 41% below its five-year average earnings multiple of 86 times.

Wall Street View

Following the company’s upbeat fourth-quarter earnings report, Credit Suisse analyst Stephen Ju bumped the investment bank’s price target on the stock to $3,940 from $3,860. He also kept his ‘Maintain’ recommendation on the shares. Ju believes Amazon sits well-positioned to retain the customers it gained throughout the pandemic, which should drive faster purchasing velocity in the quarters ahead.

Bullish sentiment follows the stock elsewhere on Wall Street. It receives 44 ‘Buy’ ratings, five ‘Overweight’ ratings, and two ‘Hold’ ratings. Currently, the shares trade around $1,000 below analysts’ twelve-month consensus price target of $4,000.

Technical Outlook and Trading Tactics

Although no brokerage research recommends selling the shares, the chart indicates possible falls in the coming weeks. Since breaking down below a multi-month symmetrical triangle, the price has retested the pattern’s lower trendline in recent trading sessions, where previous support looks to be flipping into resistance. The area also encounters selling pressure from both the 50- and 200-day simple moving averages (SMAs).

Those who take a short sale at this level should consider covering their position on a decline to crucial support at $2,515. Protect capital by placing a stop-loss order just above the March 23 high at $31.82.

For a look at today’s earnings schedule, check out our earnings calendar.