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Analysts and fund managers bet on Amazon’s “hidden potential” for 2020

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After the Christmas rally for the record announcement of buying, investors and shareholders believe that the market is underestimating Amazon and think that over the next year it could take off

The world’s largest e-commerce company, Amazon has closed a very good year in the parquet. With an acceleration lived in December, which has raised the value of its titles to $ 1,880 per share, the US giant closes 2019 as one of the main animators of the Nasdaq and all of Wall Street: accumulates increases of 25% and expensive plant to the huge year of Apple and Microsoft.

Although it has not given exact data, Amazon said last Thursday that they have broken all transaction records in their Christmas campaign. After hiring more than 250,000 people worldwide just to cover this season, Jeff Bezos confirmed the record in a public statement through his website and social networks and investors had no doubts: they triggered a surge of purchases and the value of their titles took off 3% in a single day. For experts and analysts this rebound is only the beginning. In their opinion, Amazon’s hidden potential will be unleashed in the form of increases in 2020 because its price would currently be below market reality.

Amazon's performance in the stock market From December 2018 to December 2019

The 94% of analysts of consensus ‘Bloomberg’ recommend buying shares of the company, 5.4% maintain those already in portfolio and have absolutely none of the experts believe that it is time to sell. The vast majority agree that it is below real value, giving it a target price of $ 2,178.99 per share, compared to 1,880 at which it is currently trading.

For their part, investment funds do not neglect the titles of this company and reserve a good space in their portfolios.

Even this year it has been revealed that Warren Buffet has bought shares of the company while affirming to the CNBC that “I have been an idiot for not having bought before.” Last May, it would have invested 900 million in Amazon securities claiming that its price was cheap at that time. To this day he has not detached himself from his actions.

Experts like Andrés Cardenal, of CFA, explain that this underweight of Amazon’s value is due, among other things, “to the political statements against this company” (along with the rest of Big Techs) that would have scared off investors. The United States government confirmed this summer that it is conducting an antitrust investigation into the company and its results can mark the future of the company. Most American politicians refer to these types of companies with very critical discourse. An example of this is that Elisabeth Warren, a Democratic candidate for the next presidential elections, will carry as one of the slogans of her campaign ‘ Break up big techs’.

But they are not the only winds against Amazon. The American Wall Street Journal points out that the company could face another legal front in relation to its algorithm. According to this research, the e-commerce giant would have favoured products that reported more benefits by placing them in a better way on its website, something that goes against the law. As Marketplace they have to establish the same criteria for all products.

“Underrated” growth

In addition, Cardinal defends that the possible growth of the company is being “underestimated” from Wall Street. In fact, it shows a graph that shows that the company’s revenues follow a very different trend in recent months, and even years, at the stock market price.

Amazon benefits vs Stock price

Not only would the value be distorted, but the future would also offer good prospects for the company. The price of advertising, which comes from a significant increase in recent years, could increase further in the next five years. This is because it has been announced that Bezos intends to compete in the internet advertising market, now monopolized by Google and Facebook. For their part, analysts welcome the landing in the streaming market (a new front against Netflix, HBO and Disney) that they believe could be an important source of alternative revenue for 2021.

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