AMZN Dropped 8.3% In A Day. Have You Fully Evaluated The Risk?
Amazon.com (AMZN) stock is down 8.3% in a day. The stock still looks expensive which, combined with history of only minimal recovery post dips, suggests some risk. Consider the following data:
- A $2.3 Tril company with $650 Bil in revenue currently trading at $214.75.
- Last 12 month revenue growth of 10.1% and operating margin of 11.0%.
- Has Debt to Equity ratio of 0.1 and Cash to Assets ratio of 0.1
- Currently trading at P/E multiple of 34.5 and P/EBIT multiple of 28.6
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 1.3% within a year. See AMZN Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for AMZN, see Buy or Sell AMZN Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and AMZN drops another 20-30% to $150.32 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Amazon.com (AMZN) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns.
AMZN engages in global retail sales, subscriptions, cloud services, and manufactures electronic devices like Kindle, Fire tablets, Fire TVs, Ring, and Echo.
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2022 Inflation Shock
- AMZN stock fell 56.1% from a high of $186.57 on 8 July 2021 to $81.82 on 28 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 11 April 2024
- Since then, the stock increased to a high of $242.06 on 4 February 2025 , and currently trades at $214.75
| AMZN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -56.1% | -25.4% |
| # of Days for Full Recovery | 470 | 464 |
2020 Covid Pandemic
- AMZN stock fell 22.7% from a high of $108.51 on 19 February 2020 to $83.83 on 12 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 April 2020
| AMZN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -22.7% | -33.9% |
| # of Days for Full Recovery | 33 | 148 |
2018 Correction
- AMZN stock fell 34.1% from a high of $101.98 on 4 September 2018 to $67.20 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 February 2020
| AMZN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -34.1% | -19.8% |
| # of Days for Full Recovery | 407 | 120 |
2008 Global Financial Crisis
- AMZN stock fell 65.3% from a high of $5.04 on 23 October 2007 to $1.75 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 23 October 2009
| AMZN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -65.3% | -56.8% |
| # of Days for Full Recovery | 337 | 1480 |
Worried that AMZN could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.