New Fire Phone Heats Amazon Stock

Posted Sunday, June 22, 2014 by
Dave Green • 3 min read

amazon mobile phone

Yesterday, the tech world had its eyes on one event and only; Amazon’s announcement of a new mobile phone called Fire Phone. The mobile phone, which comes after a series of high profile announcements from the online commerce giant, has revived appetite for the stock with price targets now higher. What made investors and techies so excited about Amazon’s first mobile phone and how exactly does this change sentiment for the stock? Those are exactly the two questions we set out to answer.

Amazon “Cool” Fire Phone

Jeff Bezos, the Amazon CEO and founder, announced that the company had built a SmartPhone aimed specifically at its “Prime” customer and yesterday introduced the Fire Phone. While it may look a lot like the other very popular SmartPhones in the market, the Amazon Fire Phone looks to be that, and more – much, much more. For one thing, and the most important thing in terms of the “coolness” factor, the phone has 3D capability and can track the user’s head and face. According to one consumer/user, you can look into the phone screen at yourself, but you look as you would in real life, not just two-dimensional, but with real depth.

Besides the front mounted infra-red (another notch in the coolness factor because now you can take your D selfies in the dark) cameras (note, cameras, plural, as there is one camera in each corner which provides a super-wide viewing field), there is also a 13 megapixel rear facing camera that sports an f2.0 lens and which features image stabilization. The Fire Phone has a 4.7” screen, ideal for holding in one hand, of course, and the “inner workings” of the SmartPhone are equally cool, with a 2.2 GHz chip in a quad-core processor, 2GB of RAM and Adreno 330 graphics package.

While there had been expectations of the 3D aspect of the Fire Phone, one very pleasant surprise was the inclusion of a feature known as Firefly which, via the cameras, can “detect” movies, games, books, phone numbers, food, etc., and allows the user to buy those items instantly. According to Bezos, Firefly is able to identify as many as 100 million different items, so the question, “what the heck is that?” can be easily answered by the Fire Phone’s Firefly app. Really, how cool is that?

The Hype around the Stock

In the wake of the announcement, Wall Street tech investors simply could not remain indifferent. The stock got a good a strong whiff of optimism and began to liftoff, concluding the day in the green with a rise of 2.68% in the session. But that may be only the beginning; analysts were already beginning  to fall in love with the stock on the news of the new mobile phone launch,  now this sentiment has created a significant bullish hype around the stock. Analysts’ median forecast is targeting $425 per share and high or aggressive forecasts among some analysts are being penciled in at $500, a 27% to 49.7% gain, respectively, from its current price of $334 per share. As seen in the chart, the big question is whether all those bullish projections fuelled by the hype can push the stock beyond the $350 resistance. To narrow down the options, if the Fire Phone is seen as the next “iPhone” mania then analysts could very well be right. If it is greeted by users with disappointment, $350 could prove difficult to break. Either way, with such a high profile launch, Amazon is definitely a stock to keep an eye on as dramatic developments lay ahead.

amazon graph

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