- What happened
Shares of Amazon (AMZN 2.04%) climbed Friday, adding as much as 2.4%. As of 11:57 a.m. ET, the stock was still up 0.3%, despite the broader market being under water.
The catalyst that gave the e-commerce provider a boost was positive commentary from a Wall Street analyst.
Citi analyst Ronald Josey took a glass-half-full approach to Amazon's future potential. Despite removing the company from Citi's Focus List, the analyst believes any risk to the stock is already priced in, particularly for long-term investors. He highlighted Amazon's share price, which has fallen more than 42% off its recent high.
Josey believes that Amazon Prime Day, which is expected to take place in July, could help Amazon capture a greater share of retail sales, especially given rampant inflation and the potential for a full-blown recession. Additionally, Amazon's growth has trickled to a crawl, the result of tough comps from last year, which the analyst noted will abate in the second half of 2022.
A look at Amazon's recent results suggests that the analyst is on to something. During the first quarter, Amazon's online retail sales (excluding its services, cloud, and advertising revenue) grew just 3% year over year, but that was on top of 46% gains during the same period last year.
To give those numbers context, Amazon grew e-commerce sales by 23% year over year in the 2021 third quarter, while online retail actually declined by nearly 6% in the fourth quarter.
This suggests that the pandemic-related comps will, in fact, ease over the course of the coming year. Additionally, Amazon has frequently broken online sales records with its Prime Day sale, which the company refers to as "Christmas in July."
The massive acceleration of e-commerce adoption that accompanied the pandemic was always going to subside, giving way to more normalized growth. That said, given Amazon's industry-leading position, the ongoing secular tailwinds, and the massive opportunity ahead for e-commerce, Amazon is a buy -- especially for investors with a long-term outlook.