Prologis is a company that deals in logistics real estate. Here's a breakdown of their main focus:
Owning and managing warehouses: They are the world's largest owner of warehouses, with over 1.2 billion square feet of space in 19 countries [Wikipedia].
Strategic locations: Their warehouses are situated near major transportation hubs like airports, seaports, and highways, making them ideal for efficient distribution.
Focus on urban areas: Prologis strategically places warehouses close to densely populated areas where land is scarce, and demand is high.
Recently, Prologis stock (PLD) sold off largely due to 2 reasons:
Concerns about the broader economy: Rising interest rates and geopolitical tensions have made investors cautious, and Prologis stock has been caught in this sell-off. While Prologis itself is performing well with high occupancy rates and rent increases, some investors are worried about a potential slowdown in the economy that could hurt demand for warehouse space.
Amazon overbuilding: In April 2023, Amazon revealed they had built too many warehouses and wanted to get out of some leases. This news hit Prologis stock hard, even though Amazon is only a small portion of their business. Investors worried that other companies might also be overbuilt, leading to a glut of warehouse space and lower rents.
Did the market overreact? Probably. The stock is currently trading at a P/AFFO of ~23x, compared to its 10-year average AFFO multiple of 27.92x.
The plunge sent the stock to important long-term supports as detailed below.