Amazon Could Get a Huge Boost From Just One Day This Week
Just one day this week could give Amazon (AMZN) - Get Report a major boost. On Tuesday, July 12, Amazon will host its second annual Prime Day, a major sales event.
This year Amazon is promising major deals on more expensive and desirable items such as TV sets and the year's hottest toys. Some critics are still remarking that the deals aren't as good as as Black Friday sales, and of course, customers must be subscribers to Amazon Prime to participate in Prime DAy. But analysts are still expecting the company to rake in huge profits.
Last year, Prime Day, which was initiated to celebrate the company's 20th anniversary, left consumers slightly disappointed. The hyped-up discounts were mainly on merchandise that was already cheap to begin with. Last year the sales event netted the company nearly $400 million. But this year, analysts are calling for Amazon to profit twice as much. In addition, the event should see a number of new Prime members joining the ranks, which will add to the company's yearlong bottom line.
Analysts at J.P. Morgan wrote that Prime Day is more than a one-day sales spike. Instead, they contended that it's an investment in "Prime subscriber acquisition, which is a key driver of the Amazon flywheel."
Analysts and investors have recently expressed some concern about Amazon's rate of growth. The e-commerce juggernaut has grown really large, really fast and surely can't keep up its breakneck pace.
Even as it leaves its nearest rivals, including Wal-Mart Stores, in the dust, Amazon's tremendous growth rate could begin to show signs of eventually slowing when the company reports second-quarter earnings on July 28. That's according to Piper Jaffray's Gene Munster, who is expecting quarterly revenue to clock in at $29.05 billion with adjusted earnings per share of $1.28, below the consensus for $29.52 billion in revenue and adjusted EPS of $1.09.
But even Munster is expecting knockout earnings in the third quarter, and his third-quarter revenue estimate of $31.82 billion is greater than the consensus for $31.57 billion. And other analysts are also excited about the next quarter as well. In case you haven't guessed it already, those estimates take into account Prime Day.
Amazon's stock is clearly set to skyrocket this week. If you're already holding shares, hang on. If not, grab shares as soon as you can, before the real upswing begins. Not only will Prime Day have a positive effect on the company's third quarter, but Amazon and its investors will reap the benefits for many quarters to follow.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.