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Amazon ready to capitalize on rise in holiday spending

amazonThe arrival of the shopping season has once again turned the investors’ interest towards the stocks of online retailers. It’s not a wonder that the e-commerce and cloud computing company Amazon.com Inc (NASDAQ: AMZN) tops the list. The stock lost more than $100 and declined to $710.10 on November 14, after the company reported fiscal 2016 third-quarter earnings below the analysts’ estimates.

However, the arrival of holiday season enabled the stock to regain most of the lost ground. On Friday, the stock closed at $780.37. Based on the following positive developments related to the company, we anticipate the stock to remain bullish in the short-term.

The online retailer is trying to cash in on its music loving customers by starting an online retail ticket sales in the US and Europe. The decision follows the success of its online ticketing business started a year ago in the UK.

amazon

To gain the trust of customers, the company is proactively engaged in crushing counterfeit sellers. The company is believed to be testing a new range of digital tools that would enable a genuine seller to prevent competitors from copying and selling their products. The digital tool, referred by the name ‘Brand Central’, is expected to tackle the surge in activity from fake good sellers, mainly from China.

The company has also initiated steps to remove fake reviews. The review analysis site ‘Review Meta’ stated that as many as 500,000 reviews, which are believed to be incentivized, have been removed recently.

Unconfirmed reports from Bloomberg indicate that Amazon is currently in negotiation to acquire the Dubai based online retailer Souq.com in a deal estimated to be worth about $1 billion. Souq.com claims to be the largest online retailer in the middle-east, offering 1.5 million products across 31 categories.

In the meantime, a US federal judge ordered the pilots of ABX Air to return back to work with immediate effect. About 250 pilots had gone on strike, citing excessive assignments in violation of their agreement with the carrier. Amazon is one of the main customers of ABX Air. Considering the approaching holiday season and the developments discussed above, we anticipate Amazon to remain bullish in the weeks ahead.

The historic price chart indicates a short-term support and resistance for the stock at 773 and 787, respectively. The stochastic oscillator is moving upwards thereby indicating an increase in the momentum. Thus, a trader can anticipate a further increase in the share price.

Amazon Stock Price: November 28th 2016

Amazon Stock Price: November 28th 2016

To make money out of the forecast, a trader can purchase a one touch call option. The target price for the call option should be preferably below $785. The trader should ensure that the call option remains valid for at least one week.


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