Amazon.com, Inc. (NASDAQ:AMZN) has run into a mess in India

Amazon.com, Inc. (NASDAQ:AMZN) has run into a mess in India

Amazon.com, Inc. (NASDAQ:AMZN) has run into a mess in India

Amazon.com (NASDAQ:AMZN) stock took a haircut after the company’s fourth-quarter results were released. Wall Street was disappointed with the e-commerce giant’s guidance as it calls for first-quarter sales growth of 14% at the midpoint, while analysts were looking for a 19% jump. But that was not the only bad news for shareholders on earnings day.

This is definitely not what Amazon wanted

Amazon has been hit hard by a change in e-commerce regulations in India that came into effect Feb. 1. According to a note issued by India’s Department of Industrial Policy and Promotion, e-commerce players with foreign investments cannot hold stakes in wholesale companies that sell on their marketplaces. Additionally, retail companies cannot get more than 25% of sales from just one platform.  

Unnamed sources told the Economic Times that sales via Amazon and Flipkart dropped by a third following the policy changes.

Amazon has been forced to pull product listings from its Indian site as it relied on two sellers — Cloudtail and Appario Retail — for the majority of its sales. Amazon holds a 49% stake in both of these entities, which means that it cannot sell inventory owned by them anymore. As Cloudtail was reportedly supplying around 40% of Amazon’s sales, the e-commerce giant’s India sales are surely taking a massive hit right now.

India’s fast-growing smartphone and internet penetration have been driving rapid e-commerce growth in the country, and the market is expected to reach $200 billion in sales by 2026. Amazon didn’t want to miss this gravy train so it committed billions of dollars to make a mark in India’s e-commerce space.

More importantly, the company’s investments were paying off nicely, and by the end of 2017 it had nearly tripled its share of India’s e-commerce market in just three years. But the latest regulations are expected to put the brakes on India’s e-commerce growth story. Consulting giant PricewaterhouseCoopers estimates that the regulatory changes could lead to a $46 billion drop in online sales in India by 2022.

That could knock the wind out of Amazon’s India sales and hurt the company in the long run as it now gets 30% of its revenue from international operations. Amazon doesn’t explicitly mention how much revenue it gets from India, but it can be safe to assume that this market would have been a solid long-term growth driver.

Amazon’s international revenue increased 15% year over year during the final quarter of 2018, down from the 29% growth it had clocked in the year-ago period.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1,749.00.

The projected lower bound is: 1,492.12.

The projected closing price is: 1,620.56.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 39.2977. This is not an overbought or oversold reading. The last signal was a sell 20 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 49.47. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 37 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -25. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 16 period(s) ago.

Rex Takasugi – TD Profile

AMAZON COM closed down -5.480 at 1,622.100. Volume was 53% below average (consolidating) and Bollinger Bands were 62% narrower than normal.

Open High Low Close Volume___
1,630.0001,634.9301,610.1201,622.100 3,337,589

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1,619.21 1,600.81 1,724.13
Volatility: 26 53 45
Volume: 4,144,385 6,536,284 5,533,514

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

AMAZON COM is currently 5.9% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AMZN.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AMZN.O and have had this outlook for the last 1 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH