Amazon stock was wavering in Thursday trading, as the tech giant tries to rebuild momentum following a deep slump. News that Amazon is eyeing an expansion into the used-car market captured attention Wednesday, though Wall Street analysts view the plan as unlikely to shift Amazon stock.
Amazon Autos leader Fan Jin told Automotive News Wednesday that the company will "soon" be getting into used cars as well. The tech behemoth already sells new Hyundai vehicles through a partnership with the South Korean automaker.
"Amazon potentially entering the used car market makes sense to us following its recent entry into new vehicle sales and existing partnership with ACV Auctions," Citizens JMP analyst Nicholas Jones wrote to clients Thursday. "Given the fragmented nature of the industry, we expect such a move would most directly impact traditional dealerships, small dealer groups, independent dealerships, and potentially the lead-gen (sales lead generation) platforms."
Amazon stock was last down a fraction at 194.85 on the stock market today, retreating from gains earlier in the morning. Shares are just below Amazon's 200-day moving average, a closely-watched trendline that Amazon has struggled to rally past in recent trading days.
How Amazon Stacks Up To Existing Online Auto Retailers
Jones of Citizens rates Amazon stock as outperform and reiterated a 285 price target in Thursday's note. He said that used-car retail is a $1 trillion total addressable market, by some estimates. But he does not expect the report will have a "meaningful impact" on Amazon's shares, as it has not been officially announced and is likely still in early stages.
Meanwhile, chatter that Amazon is eyeing a new market typically has an effect on stocks of competing companies. But shares of online used-car marketplace Carvana gained 5% Wednesday. Shares were ahead by about 8% in morning trading Thursday, helped by an upgrade to a buy-equivalent rating from Piper Sandler analysts. CarMax, meanwhile, was up about 2% in recent action.
"While the market is highly fragmented, we see it as unlikely that Amazon would materially disrupt top players today," Jones wrote. "However, Amazon's entrance into the category, we believe, could help accelerate consolidation given the company's reach and influence over consumers."
Similarly, analysts with Bank of America noted Amazon Autos has a different model than Carvana, for example. Amazon allows buyers to browse, order, finance and pick up vehicles through Hyundai dealers, whereas Carvana offers direct sales with delivery.
Rather than prove a threat to existing players, Amazon could help grow the overall market for online car buying, BofA analysts Michael McGovern and Justin Post wrote Thursday.
"Auto purchases have just 1% online penetration, underscoring a hesitancy to make big purchases online," the analysts told clients. "Amazon's internal surveys reportedly show customers increasingly willing to buy cars online, and we think normalizing these types of online purchases can benefit the whole online auto sector, including Carvana."
Amazon Stock: Six Straight Losing Weeks
Amazon, meanwhile, is trying to avoid a seventh straight losing week for its stock. Shares are down about 1% overall on the week despite posting gains Wednesday.
Amazon's current streak of closing lower for six consecutive weeks is the longest losing streak for the company since shares fell eight straight weeks starting in April 2022, according to IBD MarketSurge. Amazon stock lost a more drastic 30% during that slide and did not recover fully until late 2023.
The stock has been hit hard by concerns about tariffs and the broader U.S. economy in recent weeks. But the slump for Amazon stock began with its fourth-quarter results in early February, which beat earnings estimates but included a lower-than-expected sales forecast for Q1. Shares have tumbled nearly 20% from a record high of 242.52 reached Feb. 4 and are down 10% overall year-to-date.
