AMZN Stock Slips On $20B FTC Ad Lawsuit: Citi Calls Pullback A ‘Buying Opportunity’ As Amazon ‘Strongly Disagrees’ With Allegations

• Citi called the pullback in AMZN stock a ‘buying opportunity’ and maintained its ‘Buy’ rating and $350 price target on the shares.
• Amazon shares slipped Tuesday after the FTC filed a lawsuit alleging the company overcharged advertisers by roughly $20 billion and manipulated ad auctions.
• Amazon rejected the FTC’s allegations, calling the lawsuit “misguided” and saying it “strongly disagrees” with the claims.

Amazon (AMZN) shares edged lower in early trading Tuesday amid broader market weakness, but Citi sees a ‘buying opportunity’ after the Federal Trade Commission (FTC) filed a fresh lawsuit against the company, alleging its advertising practices overcharged advertisers by roughly $20 billion and manipulated ad auctions.

The firm said AMZN stock remains its top pick, with a ‘Buy’ rating and a price target of $350, implying potential upside of over 37% from Monday’s close. 

In pre-market trade, AMZN stock edged 0.8% lower after a fall of 2.5% in the previous session. On Stocktwits, retail sentiment around the shares remained in ‘bearish’ territory over the past week, even as chatter increased to ‘normal’ from ‘low’ levels.

Citi Says Amazon’s Ad Business Remains Strong

According to Citi, the FTC lawsuit could create near-term pressure on Amazon shares, but the underlying advertising business remains strong. It pointed to continued advertiser spending on Amazon, saying marketers are allocating more money to the platform based on the results they generate.

Citi also flagged improving artificial-intelligence (AI) demand at Amazon Web Services (AWS). The firm expects accelerating AI-related demand to support AWS growth and reinforce Amazon’s broader earnings outlook.

Amazon Pushes Back On FTC Allegations

Amazon rejected the FTC’s claims, calling the lawsuit “misguided” and saying it “strongly disagrees” with the allegations surrounding its sponsored advertising pricing and auction process.

The company also sought to distance the case from claims of consumer harm. “The FTC wants the public to believe this case is about higher prices for consumers. It is not,” Amazon said.

The company stated that its pricing practices are designed to provide customers with competitive prices across a broad selection of products. Amazon said it also works to ensure its retail and grocery prices meet or beat those offered by other retailers.

Amazon added that customers saved more than $230 on average last year through deals, coupons and its Subscribe & Save program.

How Is Retail Feeling About AMZN Stock?

Retail sentiment on Stocktwits remained cautious, with traders focused more on Amazon’s price action than taking a clear directional view. 

One investor described the stock as being at an “interesting spot,” with the risk-reward profile looking relatively balanced and suggested waiting for a clearer signal before taking a position.

Another trader similarly pointed to Amazon sitting at a key technical level, noting subdued trading volume and saying a decisive move could help establish the stock’s next direction.

AMZN stock has gained over 12% this year and around 16% over the past 12 months. 

Read also: Tom Lee Sees ‘Very Strong’ September Market Rally If Fed Holds Rates – Says Bitcoin’s ‘First Leg Up’ Has Begun

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