What is happening at Amazon?
Amazon is currently experiencing its longest losing streak in almost two decades.
The stock closed last Friday down 0.4%, completing nine consecutive days of negative trend.
In summary of this downturn period, Amazon's value has been cut by 18% - an enormous market cap loss of approximately $470 billion.
To understand the magnitude of the decline, the stock has lost 17% of its value since the beginning of the month, its worst performance since April 2022.
This is while the Nasdaq 100 index fell by only 3.2%.
What is worrying the market?
The main reason for investor pressure is the company's ambitious investment plans.
Amazon plans to spend approximately $200 billion in 2026 on building data centers, chip development, and artificial intelligence.
This expenditure is part of a broader technological arms race, with total investments by tech giants in AI expected to reach $650 billion next year.
Anthony Saglimbene, a strategist at Ameriprise, notes that creating negative cash flow on such a scale constitutes a "significant warning sign".
Simply put, investors are concerned that the company is spending huge sums on future projects, leaving less cash available in the short term.
But despite the negative trend, historical data shows an interesting picture: in the five previous times the stock reached a similar losing streak, it recorded gains in 100% of cases in the following five days, with an average profit of 7.8%.
And from another angle -
We are currently engaged in an in-depth study of hedge fund reports that began to be published late last week.
Meanwhile, we discovered that Seth Klarman (Baupost Group) made an interesting portfolio update in Q4.
He opened a new position in Amazon and bought over 2 million shares last quarter.
This makes Amazon the largest position in his portfolio by a huge margin over the rest.
Amazon now accounts for almost 10% of his portfolio.
While some investors flee in fear and Amazon bleeds - do big sharks smell blood?
We are monitoring.