Coronavirus Pandemic – How Amazon beat the Broader Market during the Pandemic

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During the pandemic, Amazon stock has been one of the biggest winners, returning a stunning 79% YTD and staying well ahead of the other major indices, ETFs, and bellwether stocks.  

1. In Q1-2020, the Amazon stock returned a mere 2%. Then, as the pandemic anchored and the lockdowns started, it broke loose, setting new highs every month and even establishing momentum not only for the FAANG complex but also for the market as a whole. In Q2 alone, it returned an awe-inspiring 52%, followed by another 10% in the current quarter. The exponential slope of the trendline tells the 2020 story for the Amazon stock.

2. By contrast, the S&P 500 index -- a.k.a. the broader market -- plummeted 23% (from 3,235 to 2,489) in Q1-20, which included the historic fall of 1,075 points between 2/10 and 3/16. Then the index made a stunning reversal in Q2, returning an awesome 26%. Yet that was still 1/2 of the return that Amazon generated in Q2. The index moved up another 8% thus far in this quarter.

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3. The regression scatter shows how Amazon and S&P 500 diverged and remained uncorrelated during this period. Generally, the leading stocks move in tandem with the index they belong to, but Amazon bucked that norm and charted its growth course. When the broader market plunged in March, Amazon did drop 15%, but made a steep V-shaped recovery in the next six weeks, from 1,785 to 2,410.

Now that the Amazon stock has hit 3,200 and the momentum remains strong, it is expected to cross 3,400 in the next couple of months.

While the pandemic has been disastrous for the brick-and-mortar departmental retail, Amazon has been stealing their business left and right. 

Stay safe!

Data Source: Yahoo Finance

-Sid Som

homequant@gmail.com