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.
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.