Amazon Stock Falls For Six Consecutive Weeks

Amazon’s stock (AMZN) continues to backslide, dropping nearly 15 percent over the span of six weeks from its peak in early July. Should investors take this as a warning sign about the direction of the company or an opportunity to buy the dip and enjoy high returns in the long run?

Shares for the e-commerce giant were down 3 percent on Monday, October 4. This is a sizable dip against the backdrop of the stock’s daily volatility over the past decade—measured by one standard deviation away from the daily average—that has stood at a relatively milder 1.9 percent.

It has taken a year, but the S&P 500 is seemingly reaching equilibrium after falling more than 5 percent from its all-time high. Meanwhile, the tech-rich NASDAQ Index has fared worse and is down 8 percent from its peak four weeks ago—already one-third the size of the COVID-19 correction from February and March 2020. Influenced by the volatility of their neighbor’s market, on Monday Mexico’s BMV IPC Index dipped 0.39 percent below its previous close last Friday.

The overall freefall of the global market, which has seen a devaluation of bonds and equities, could potentially be influencing the value of Amazon’s stock. However, identifying the underlying reason has been difficult in a market that has suffered multiple shocks including multiple weather events, which have affected various sectors, and the ongoing COVID-19 pandemic. Less likely is an indirect association to Facebook’s outage, which led the social media giant’s stock to sink by over 5 percent yesterday. On the other hand, Amazon’s slowdown could be a natural pause associated with the pre-Christmas season.

In this context, it is possible that Amazon’s recent dip may not be associated with the company’s performance at all but rather a side affect of a wobbling global economy. Moreover, the company could regain ground during its “Holiday Beauty Hall,” which kicked off Monday and will last through October 25 with the goal of engaging shoppers ahead of the normal Black Friday season.

Overall, there are too many factors influencing the market to identity a clear answer for Amazon’s recent decline but they company stands to regain ground with the holiday season around the corner. After a such high cumulative loss, investor hesitancy is understandable but with such a strong company this could be the perfect moment to buy.