5 Red Days In A Row: Amazon.com Stock Is Down 7.4%

A five-day slide has erased significant market value, prompting a closer look at the company's mixed fundamental picture.

A recent streak has erased about $200 billion from Amazon.com (AMZN) 's market value. The stock has now moved lower for 5 consecutive trading days, a cumulative loss of 7.4%.

Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions. The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, and Echo and other devices.

The Streak Next To The S&P 500

Here is how AMZN stock stacks up against the S&P 500 over the streak and the periods around it:

The stock's move is its own, but its fundamentals are a mixed picture.

Over the same 5 trading days the S&P 500 returned -0.4%, so the streak is mostly this stock's own story, not the market's. This kind of momentum is not unique; currently, 102 S&P 500 stocks are on winning streaks of 3 days or more, and 40 are on losing streaks.

The market may be weighing a complex set of metrics. Amazon's revenue over the last twelve months grew 14.2%, ahead of the S&P 500 median revenue growth of 7.8%. Yet its operating margin of 11.5% is below the S&P 500 median of 18.4%, and it trades at a price-to-earnings multiple of 27.4, versus a median of 24.2.

A streak is a signal to re-evaluate, not to react.

A string of losses or gains brings a stock into focus, but it is not an instruction. It is information about momentum and where other investors are paying attention. The disciplined move is to check the business against the price. The numbers here provide a starting point for that assessment.

If the drop has you weighing an entry, resist buying a falling price alone. Our Buy the Dip screen ranks the marked-down names where growth and cash generation still support a recovery.

Prefer the theme to this single name? A Nasdaq ETF like ONEQ owns the whole group. It is still a concentrated bet on that one theme, though, which is exactly the gap the portfolio below closes.

Weakness In One Name Should Be Noise, Not News

For a diversified holder, a streak like this is a data point. For a concentrated one, it is a hole in the plan. The difference is never the stock; it is the portfolio built around it.

Building that portfolio is what the Trefis High Quality (HQ) Portfolio does: roughly 30 businesses with the cash generation and balance-sheet strength to absorb a bad month, selected and rebalanced by rules. It has a track record of outpacing a benchmark that combines all major indices - the S&P 500, S&P Mid-cap, and Russell 2000. Make the next streak, in either direction, someone else's drama.