Amazon Stock Dips Below $200—Is Now the Time to Buy?

While Amazon’s stock has taken a beating lately, dropping below the psychologically important $200 mark, the e-commerce giant’s financial performance tells a different story. The company’s shares have plummeted nearly 16% in the past month, considerably underperforming the broader market. The stock is part of the Magnificent Seven that has seen an 18% decline from its January peak. That’s quite a tumble for a tech behemoth that just reported knockout numbers for 2024. The company’s short-term support sits at $167, providing a potential floor for the stock price.

Let’s get real about those numbers for a second. Amazon crushed it last year, with net sales hitting a mind-boggling $638 billion – up 11% from the previous year. Operating income? Nearly doubled. Net income? Same story. The company’s making money hand over fist, yet investors are acting like it’s 2001 all over again. The company’s impressive operating margin improvement to 11.3% showcases their growing efficiency. The surge in operating cash flow to 115.9 billion demonstrates exceptional financial health.

The most impressive part? Amazon’s finally figuring out how to turn its massive revenue into actual profits. The international e-commerce segment, long a money pit, is now posting record operating income. AWS, their cloud computing cash cow, managed to squeeze out operating margins of nearly 37%. Not too shabby for a company that started by selling books online.

But here’s where things get interesting – and a bit weird. Despite posting these stellar results, Amazon’s stock keeps sliding. It’s now trading at a P/E ratio of 38.39, which might seem high until you remember this is a company that’s practically printing money. Their debt-to-equity ratio is sitting at a measly 0.18, meaning they’re about as leveraged as a teenager with rich parents. The market’s Fear & Greed Index currently sits at 39 points, indicating significant investor anxiety.

Looking ahead, Amazon’s being surprisingly conservative with their guidance, projecting Q1 2025 revenue growth of just 5-9%. They’re also planning to drop over $100 billion on capital expenditures in 2025, mostly on AWS infrastructure and AI. That’s a lot of cash to spend when your stock’s in the dumps.

Wall Street analysts, for their part, seem to think the current stock price is a bargain. Their average 12-month price target of $260.65 suggests a potential upside of over 30%. Then again, analysts are often wrong – shocking, right?

The recent dip below $200 has formed what technical analysts call a “doji candlestick” – fancy talk for a potential bullish reversal signal. But with recent insider sales and near-term headwinds, the short-term picture remains murky.

One thing’s clear though: Amazon’s fundamentals are solid as a rock, even if its stock price isn’t acting like it.