It’s been an up-and-down day for Club name Amazon (AMZN), which led to an internal discussion about whether to book some profits after this year’s run higher. As Amazon came out of the gate stronger on a positive Wall Street research note, Jim Cramer said during Wednesday’s Morning Meeting that he had considered booking some profits. But, Jim quickly opted against such a move as he digested the Federal Trade Commission’s suit against Amazon over Prime and the stock declined. In a statement, FTC Chair Lina Khan said, “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.” On Wednesday afternoon’s Homestretch , Jim said he was initially worried about the FTC action until he took a closer look at the government’s complaint. He said he felt it would not hurt Amazon much, calling Prime “one of the great bargains of all time, which is Amazon’s response, by the way.” In our view, the FTC’s lawsuit is highly unlikely to result in any material negative to the Amazon investment thesis. People love Amazon Prime and the value of the service has only continued to increase over the years. We don’t see a lawsuit over making it easier to cancel the subscription service resulting in much more than a manageable fine and maybe a change to the cancelation process, which again doesn’t seem all that risky to us given the value of the service. Instead, we think investors would be better to think about some of the secular trends working in the company’s favor. Some of them were outlined by Jefferies, which raised its Amazon price target to $150 per share from $135 and reiterated its buy rating on the stock. In a note to clients, the analysts said that further upside remains, predicting fiscal year EBITDA (earnings before interest, taxes, depreciation and amortization) will prove stronger than expectations and that positive sentiment around Amazon’s use of artificial intelligence will…
Read the full article here
Leave a Reply