Remembering Henry Blodget and His Sensational Forecast in Amazon

In mid-December 1998, a gutsy young Wall Street tech analyst named Henry Blodget (while working for CIBC Oppenheimer) made one of the great Dot Com calls of all time when he raised his target price for Amazon from $150/share to $400/share (pre-splits, of course). The Dot Com mania still had another year to run and, incredibly, Blodget's forecast actually came true!

Blodget's "cheer-leading" of the Dot Com stocks at that time would eventually get him in trouble later after the monumental collapse in Dot Com stock prices beginning in early January 2000 and lasting through most of 2001. The tech-heavy Nasdaq Composite Index fell more than 80% over that time period and Amazon's stock price fell 94%.

Today, another savvy young tech analyst, this time from Morgan Stanley, made another sensational call in Amazon. Brian Nowak, Morgan's tech analyst in his mid 30's with 10 years experience and a solid track record, announced that Amazon is destined to soar to $2,000 per share as soon as one year from now, which equates to a $1 trillion market capitalization! Given Amazon's stock price of $1,125 before the release of Nowak's bullish research report, a $2,000 per share stock price in a year would translate into about a 78% annual rate of return. Nowak's forecast here is among the gutsiest calls I've ever heard, especially given the fact that Amazon doesn't currently make any significant profits, trades at 285 trailing twelve month earnings, and is likely to face significant regulatory headwinds over the next several years because of its predatory pricing policies.

When Blodget made his sensational call in December 1998, Amazon's stock price jumped 25% that day. I find it interesting that Nowak's even more sensational call today resulted in a rally of just 0.34% in Amazon's stock price!

Bottom line: Amazon's record intra-day high today (Monday) at $1,139.90 may very well be the high in this Wall Street darling for quite some time! A major correction in this closely watched "FAANG" stock probably began today (November 13th) from its high at $1,139.90 in the last hour of NY dealings, and the loss of market leadership from Amazon will almost certainly have negative consequences for the broader market.

Amazon (AMZN) Daily Chart