Amazon stock is down 12.49% this month as the war of words between President-elect Donald Trump and CEO Jeff Bezos continues.
But despite the pullback in Amazon stock today, we remain bullish on AMZN.
Before we get into our bullish stance on Amazon.com Inc. (Nasdaq: AMZN), here are some details regarding the acrimonious exchange between Trump and Bezos.
Why Amazon Stock Is Down This Month
Trump's beef with Bezos, and Amazon, has a lot to do with the president-elect's disdain for The Washington Post. Bezos, the founder and CEO of Amazon, is also the owner of The Post.
Trump thinks Bezos bought The Post in 2013 to persuade Washington politicians to keep Amazon's taxes low and help the company skirt antitrust scrutiny.
Trump has said that since he would be tough on Amazon, Bezos was using The Post to write ugly articles about the Republican candidate to keep him out of the White House.
"This is owned as a toy by Jeff Bezos who controls Amazon," Trump told FOX News in May. "Amazon is getting away with murder tax-wise. He's using The Washington Post for power so that the politicians in Washington don't tax Amazon like they should be taxed."
The slide for Amazon stock has continued into this week already. Today, Amazon stock is down more than 2.5% to below $720 per share.
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Clashes between corporate America and politicians are nothing new. Still, Bezos took the high road after Trump's win. He extended his congratulations to the 45th president of the United States and tweeted: "I for one give him my most open mind and wish him great success in his service to the country."
While politics has pressured Amazon stock recently, this is just a short-term reaction from investors. We have been and remain bullish on AMZN stock, and view the recent pullback as a buying opportunity...
Why We're Bullish on AMZN Stock in 2017
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Another reason Amazon stock is down is disappointing Q3 earnings.
AMZN shares fell more than 5% in after-hours trading on Oct. 27 following Q3 2016 results. The company posted Q3 earnings per share (EPS) of $0.52 on revenue of $32.71 billion. Analysts were looking for EPS of $0.78 a share on revenue of $32.69 billion.
Amazon has revenue of $18.87 billion in North America during the quarter. That figure was shy of analyst expectations for $19.09 billion, according to FactSet. International sales, however, came in at $10.61 billion. That was above Wall Street projections for $10.44 billion.
Amazon Web Services was also another bright spot. The unit brought in $3.23 billion in revenue during the quarter. Projections were for AWS to bring in $3.17 billion.
For investors, the most important thing is that Amazon is expanding offerings and increasing its global presence. The company has long forfeited short-term profits in favor of free spending on projects to grow its reach into new businesses.
Amazon is no longer simply an online shopping site. Over the last 20 years, the company has grown from a small online bookseller to the fifth most valuable company in the United States. It now sells everything from detergent to cloud-computing power. Its Prime membership count is climbing. And new endeavors include ventures into areas like voice-controlled technology and delivery drones.
Bezos has repeatedly shown he can deliver. And he's the biggest reason we're bullish on Amazon stock.
He did so in a big way with retail. Bezos saw the industry's growth potential and built out infrastructure to capture that growth. He did the same with AWS, where he built out a global tech infrastructure.
Today, Amazon holds the prime e-commerce position outside of China. And AWS continues to show higher utilization, better efficiency, and better margins. The company is also growing its video, music, and device offerings.
Additionally, Amazon Prime Now offers household items and everyday essentials with free two-hour delivery in several locations. Amazon also offers one-hour restaurant delivery from participating restaurants across the country.
Of the 43 analysts who cover the stock, 34 rate AMZN "Buy." Five maintain an "Overweight" rating, and five have a "Hold." There are no "Underweight" or "Sell" ratings, according to data from The Wall Street Journal. The average price target is $939.63.
Near $720 per share, the Amazon stock price is still up 6.06%. Three- and five-year gains are 94% and 229%, respectively.
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