Amazon.com, Inc. (NASDAQ:AMZN) might not finish the year in the red, but the stock has been on a sharp decline since hitting over $2,000. The markets as a whole have been struggling and although Amazon itself may not be a worse investment than it was just a few months ago, there’s no question it was heavily overpriced.
Recently, the stock also made a very bearish crossover with its 50-day moving average falling below the 200-day mark, signaling a “death cross” that could lead to even more selling. How much further it drops is the big question.
However, at over $1,400, Amazon’s stock is still at a hefty price as it trades at 80 times its earnings and more than 17 times its book value. While investors may have shown a willingness to pay even higher multiples for the stock in the past, given the uncertainty that exists in the markets, I wouldn’t count on a big recovery coming anytime soon.
In fact, the threat of impeachment could make 2019 an even more tumultuous year for stocks. Until we see the political environment in the U.S. gain some stability, it wold be hard to justify making a bet on a stock like Amazon that has significant downside risk.
Other tech stocks offer good returns at more modest multiples, and Amazon being a better buy than its peers is a hard argument to make, especially under bearish conditions. Although I don’t see Amazon dropping much further down in price, I’m not confident it will recover up to its previous highs and it’s not a stock that I’d consider buying today.
