Will Amazon Deliver? You Can Bet On It (Either Way).
Editor’s note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in AMZN.
Amazon, Inc. (Ticker: AMZN) has been a staple in the e-commerce and tech industries for years, consistently growing, adapting, and even setting market standards. However, after recently hitting new all-time highs, the stock faces some challenges as we head into its next earnings report on February 6. As Amazon readies to announce its results, traders are watching closely to see whether the company will deliver strong guidance or if bears will steal the show this earnings season.
Spearheading Supply Chain Innovation
Amazon’s vast ecosystem of services, including its massive e-commerce platform, AWS (Amazon Web Services), and digital content offerings, has positioned the company as a global powerhouse. AWS continues to be a major driver of Amazon's profits, and with businesses increasingly relying on cloud services, the division remains critical to Amazon’s long-term financial health.
Additionally, Amazon has been expanding its offerings through initiatives like Amazon Prime, which bundles multiple services, and continues to refine its logistics and delivery infrastructure. These efforts help maintain customer loyalty and attract new subscribers, even in a competitive e-commerce landscape.
Amazon’s data-driven approach allows it to continuously improve its operations, refine its product offerings, and enhance its customer experience. This ensures Amazon stays at the forefront of innovation, which could keep it well-positioned to weather tough market conditions. With increasing revenue from its advertising business and its potential to scale its services globally, Amazon could continue to report strong financial results despite the pressures of rising costs.
Traders that think Amazon can continue to build on its momentum may find a trade with Direxion’s Daily AMZN Bull 2X Shares (Ticker: AMZU), which seeks daily investment results, before fees and expenses, of 200% of the performance of Amazon.com, Inc. common stock (Ticker: AMZN)
Below is a daily chart of AMZN as of January 23, 2025.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results.
Can the Consumer Keep on Keeping Up?
Despite its market dominance, Amazon faces challenges that could impact its performance moving forward. One major headwind is the rising cost of operations, including labor and shipping expenses. While the company has made significant investments in automation and logistics to address these costs, it still faces pressure from global supply chain issues.
The increasing competition from other tech giants, such as Microsoft in the cloud space and Walmart in e-commerce, may also pose risks to Amazon's future growth. Additionally, if Amazon's profitability from its non-core businesses—like its streaming platform Amazon Prime Video—slows down, it could impact overall results.
Rising consumer costs could also affect demand for Amazon’s products, especially as inflationary* pressures weigh on spending habits. Moreover, the company’s reliance on AWS could make it vulnerable to market fluctuations in the tech sector.
With these risks in mind, Amazon’s upcoming earnings report could reveal whether the company is managing these pressures effectively. Analysts are currently predicting an EPS (earnings per share)* of around $1.54. A miss on these expectations, or weak guidance for the future, could fuel a drop in share prices.
In this situation, Direxion’s Daily AMZN Bear 1X Shares (Ticker: AMZD), which seeks daily investment results, before fees and expenses, of 100% of the inverse performance in common shares of Amazon.com, Inc. (Ticker: AMZN) could find a bid.
More Stock and Leveraged Sector Plays
Direxion has more than one way to take leveraged, sector-based plays, in addition to offering individual equity funds in addition to Amazon. These include stocks like Microsoft, Meta, Apple, Tesla and more. Investing in the Funds is not equivalent to investing in the underlying stocks.
Direxion’s Daily MSFT Bull 2X Shares (Ticker: MSFU) seeks daily investment results, before fees and expenses, of 200% of the performance of Microsoft Corporation common stock (Ticker: MSFT) while the Direxion Daily MSFT Bear 1X Shares (Ticker: MSFD) seeks daily investment results, before fees and expenses, of 100% of the inverse performance of Microsoft Corporation common stock (Ticker: MSFT).
The Direxion Daily META Bull 2X Shares (Ticker: METU) seeks daily investment results, before fees and expenses, of 200% of the performance of Meta Platforms, Inc. common stock (Ticker: META), while the Direxion Daily META Bear 1X Shares (Ticker: METD) seeks daily investment results, before fees and expenses, of 100% of the inverse performance of Meta Platforms, Inc. common stock (Ticker: META).
The Direxion Daily AAPL Bull 2X Shares (Ticker: AAPU) seeks daily investment results, before fees and expenses, of 200% of the performance of Apple, Inc. common stock (Ticker: AAPL) before fees and expenses, while the Direxion Daily AAPL Bear 1X Shares (Ticker: AAPD) seeks daily investment results, before fees and expenses, of 100% of the inverse performance of Apple, Inc. common stock (Ticker: AAPL).
But for traders looking to trade the broader tech sector with leverage may be interested in Direxion's Daily Technology Bull 3X Shares (Ticker: TECL) and Daily Technology Bear 3X Shares (Ticker: TECS). These funds seek daily investment results, before fees and expense, of 300%, or -300%, respectively, of the performance of the Technology Select Sector Index*.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Technology Select Sector Index (IXTTR) is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector which includes the following industries: computers and peripherals; software; diversified telecommunications services; communications equipment; semiconductors and semi-conductor equipment; internet software and services; IT services; electronic equipment, instruments and components; wireless telecommunication services; and office electronics.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with AMZN and may increase the volatility of the Bull Fund.
Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with AMZN and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to AMZN is impacted by AMZN’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to AMZN at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to AMZN increases on days when AMZN is volatile near the close of the trading day.
Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with AMZN and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to AMZN is impacted by AMZN’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to AMZN at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to AMZN increases on days when AMZN is volatile near the close of the trading day.
Amazon.com, Inc. Investing Risk — Amazon.com, Inc. faces risks associated with intense competition across different industries, including physical, e-commerce omni channel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, and transportation and logistics services; the expansion into new products, services, technologies and geographic regions; its international activities; the variability in the demand for its products and services; fraudulent and unlawful activities of sellers; intellectual property rights; successfully optimizing and operating its fulfilment network and data centers; data loss or other security breaches; maintaining and hiring necessary key management personnel; maintaining good supplier relationships; the success of acquisitions or joint ventures or other investments; its rapidly evolving and expanding business model; and legal, regulatory, tax liability and litigation issues.
Consumer Discretionary Sector Risk — Companies in the consumer discretionary sector are tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily AMZN Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.