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Amazon’s Stock Is Volatile despite This Year’s Gain in Value

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Better-than-expected results contributed to Amazon stock price gains

Amazon’s (AMZN) stock has experienced large swings over the years. This year in particular has been favorable for Amazon’s investors. As the chart below shows, the stock has gained 70% in value. Despite this gain, Amazon’s stock has experienced large gains and losses over a short period of time, which makes it quite volatile.

There are two main reasons why Amazon’s stock has had a rally this year. First, the company has had better-than-expected results in the last three quarters. It has shown that it can produce profitability on a consistent basis.

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Second, an increase in financial transparency helped Amazon gain confidence from investors. In particular, the company started revealing the financial details about its fast-growing cloud services business segment, AWS (Amazon Web Service). Investors were pleasantly surprised by AWS’s results in 1Q15.

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Amazon’s stock had a minor blip last month

Amazon’s stock had a minor setback in August this year. The stock fell by about 10% on August 21 during the broader technology sector sell-off. Investors were worried about the impact that China’s (FXI) slowing economy could have on the tech sector.

Netflix (NFLX) stock fell by about 20%, while Facebook’s (FB) stock fell by 10%. Qualcomm (QCOM) derives about 50% of its revenues from China, which was the main reason why its stock fell by 10%.

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