Amazon's (AMZN) tussle with Future Retail has taken an unprecedented turn. Reuters reports that the Indian retail outlet has asked a New Delhi court to abort arbitration proceedings in Singapore, terming it illegal. AMZN shares jumped 2.21% to close at $3,408.09 on December 3.
Amazon is a U.S. company that offers online retail shopping services. It also generates revenues from cloud computing. Amazon's earnings report for Q4 2021 is scheduled for February 03, 2022.
Amazon vs. Future RetailIn its defense, Future Retail argues that the proceedings in Singapore are based on a 2019 deal that India’s antitrust agency suspended. The Competition Commission of India suspended the 2019 deal, arguing that Amazon suppressed valuable information while seeking approvals.
The legal standoff in India and Singapore stems from Amazon using terms of its $200 million investment in Future Retail to block a sale of its retail assets.
Amazon has dubbed the asset sale illegal, alleging it amounts to a breach of certain contracts. The retailer insists the deal has no legal existence in India as it does not have antitrust approval.
A Singapore arbitration panel is hearing the case, but Amazon and Future Retail have been fighting parallel cases in Indian courts. The U.S. retailer has already told the Singapore arbitrator that the CCI's suspension of the 2019 deal does not make the transaction void, as it has allowed Amazon to reapply for clearances.
Stock RatingLast month, Cowen & Co. analyst John Blackledge reiterated a Buy rating on Amazon and raised the price target to $4,500 from $4,300, implying 32.04% upside potential to current levels. According to the analyst, Amazon is his top pick for 2022. He expects sales growth to accelerate in the second quarter as e-commerce comps ease.
Consensus among analysts is a Strong Buy based on 30 Buys. The average Amazon price target of $4127.50 implies 21.11% upside potential to current levels.
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Amazon (AMZN) provides an e-commerce platform, facilitating the retail sale of consumer products and subscriptions all around the world. I am bullish on the stock.
Due to the COVID-19 lockdowns, an e-commerce renaissance ensued in 2020. Consequently, AMZN stock ripped higher and surpassed the eye-popping $3,000 mark.
Yet, even heavily favored stocks like AMZN can't just go up forever. Thus, in 2021 the stock drifted around and generally underperformed the U.S. stock-market indexes.
However, when looking at Amazon's stock chart, it's possible that AMZN is just basing for a breakout, as technicians like to say. Indeed, one prominent Wall Street expert just issued a price target that would put $3,000 far in the rear-view mirror. (See Analysts’ Top Stocks on TipRanks)
What Amazon Must DoThe U.S. holiday season for 2021 is finished, and now Amazon must work diligently to provide as much value for its customers and shareholders as possible.
Yet, there's another group of individuals that Amazon shouldn't ignore in 2022. Specifically, the company will need to pay attention to its many workers during a time when human capital is in short supply.
The U.S. labor shortage has hit businesses hard generally, and Amazon is certainly no exception to this. Sure, Amazon correctly asserts that it's benefiting from "unprecedented consumer demand," but meeting that demand will require extra workers during a persistent national labor shortage.
CFO Brian Olsavsky has even admitted that Amazon anticipates labor-related productivity losses and cost inflation to add $4 billion in operating costs during 2021's fourth quarter.
That's an uncomfortable number, but Amazon will have to cough up and pay its workers enough to stick around. This isn't a reason to abandon AMZN stock as an investor, though it might cause a price dip in early 2022, which in turn could present a great buying opportunity.
Poised to ChangeIt's also possible that Amazon will overcome the supply shortage and post outstanding financial results in the coming quarters. Could 2022 be the year when AMZN breaks out to $4,000 or even higher?
For his part, Monness Crespi Hardt analyst Brian White seems to envision Amazon stock hitting and exceeding that number. Not long ago, he gave the stock a Buy rating along with an ambitious $4,500 price target.
Apparently, Amazon's future results don't entirely revolve around the company's primary e-commerce business, as White is particularly upbeat about the company's cloud-focused business, Amazon Web Services (AWS).
Between e-commerce, AWS, digital media, advertising, Alexa, and other business segments, Amazon could be poised to excel during the next 12 months.
Most importantly, White isn't worried about the lackluster price performance of AMZN stock in 2021.
Even as the stock "has trailed [2021's] healthy market rally," the analyst believes that Amazon's "fortunes are poised to change in 2022."
Wall Street's TakeTurning to Wall Street, Amazon comes in as a Strong Buy, based on 30 unanimous Buy ratings. The average Amazon price target is $4,127.50, implying 21.2% upside potential.
The Takeaway$4,500 might seem like a difficult target to reach after a dull 2021 for AMZN stock.
However, it's perfectly normal for growth stocks to take a breather. In some instances, the breather could take up an entire year - that's just the way it goes.
So, be patient and be prepared for a possible early-2022 dip in Amazon stock. If this happens, it's likely only an invitation from Wall Street to start or add to your position.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
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