Investors are fleeing the S&P 500, with many leaving their portfolios on the sidelines and leaving their short positions in stocks like Amazon, Apple, Facebook and Twitter in the dust.
It’s a stark reversal from the days when the S.&=P 500 would outperform the broader market by as much as 15 per cent a year.
“Amazon is in a real estate bubble right now,” said Andrew Johnson, senior research analyst at BTIG Research.
Amazon stock is trading around $1,000 a share, or $1.15 per share higher than the S=P.
The S&P 500 is down 12 per cent this year.
The Dow Jones Industrial Average is down 27 per cent.
Analysts say the big fall in the S &X has left many investors stranded and unable to take advantage of opportunities that might have been.
For one, investors have seen Amazon’s stock collapse by a factor of five in the past year.
“I think it’s fair to say that the people that were doing this over the past two or three years, the folks who had done the short selling, that it’s all been pretty much wiped out,” said John Kynaston, an analyst at Cowen &=Chase.
Investors are also worried about Amazon’s continued earnings growth.
Mr Johnson said Amazon’s earnings are down almost 10 per cent so far this year, compared with the same period last year.
In the next quarter, Amazon will report earnings of $3.85 per share, down from $3 per share in the third quarter.
That means it will have a loss of $9.45 billion, a decrease of $1 billion from the previous quarter.
“The real question for investors is, what’s the next quarterly profit?”
Mr Johnson said.
A bigger concern for investors was the fact that Amazon was also selling shares for pennies on the dollar, with some companies selling their shares for as little as $1 a share.
“In the last quarter, you saw Amazon selling for a penny a share and now it’s trading for $1 per share,” Mr Kynastos said.
“That’s just insane.”
Amazon’s stock has lost about a third of its value over the last year, while the S500 is down about 30 per cent over the same time period.
Last year, Amazon’s shares were trading for about $80,000.
While the S and X have both suffered significant losses this year with Amazon’s share price down more than 40 per cent, analysts say they still have plenty of room to make money.
“Amazon may not be in a bubble,” Mr Johnson of BTIG said.
“But it is a pretty big bubble, which is why investors need to get into it and make money.”
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