It’s Prime Day: What Wall Street Thinks Of Amazon Stock

Prime Day is here, and Wall Street analysts have been sharing insightful analysis on the blockbuster event and on Amazon stock. Here are some of the key takeaways.
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Amazon’s Prime Day is finally here. The 48 hours of sales that is perhaps more important for the e-commerce giant than Black Friday weekend has been good for Amazon stock (AMZN). Share price has risen a solid 8% since the start of June, easily beating the S&P 500’s 1% loss.

Today, the Amazon Maven looks at what Wall Street analysts have said about Amazon and its stock ahead of Prime Day, which starts on Monday, June 21.

Figure 1: Amazon's Prime Day.

Figure 1: Amazon's Prime Day.

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Prime Day expectations

A couple of sell-side experts have published recently on Prime Day. Telsey’s Joseph Feldman sees event sales rising by as much as 16% year-over-year, likely lagging the overall pace of e-commerce revenue growth due to the tough pandemic comps (Prime Day 2020 also happened closer to the holiday season).

The analyst also provided an insightful list of headwinds and tailwinds that are likely to impact Prime Day sales in 2021.

  • Tailwinds: here, Amazon benefits from everything that makes the company a highly likely secular winner in online retail. It starts with a favorable macro environment, but also includes increasing global Prime base, wider private brand assortment, among other factors.
  • Headwinds: in addition to the tough 2020 comps, Prime Day sales could be dragged by tighter inventory due to supply chain constraints.

On Park Avenue, JPMorgan’s Doug Anmuth sees Prime Day as just a piece of the value-creating Amazon Prime puzzle. The analyst thinks that the $120/year service delivers $1,000 in benefits to subscribers. He sees the user base growing alongside a possible subscription price hike as early as this year.

The graph below shows how popular Amazon Prime has become since the start of the pandemic. Between February and June 2020, it is estimated that the proportion of young consumers that had a membership skyrocketed from 69% to 81%. It is unlikely that this number will decline sharply.

Figure 2: Amazon Prime usage penetration among internet users in the United States as of June 2020, by age group.

Figure 2: Amazon Prime usage penetration among internet users in the United States as of June 2020, by age group.

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Beyond the event

Some Wall Street research notes of the past week looked at Amazon beyond the impact of Prime Day or Amazon Prime in general.

Jefferies’ Brent Thill does not seem too concerned about the reopening of the economy leading to a drop off in e-commerce sales. His research suggests that well over 60% of consumers have continued and will continue to shop online, especially on amazon.com, more often than they used to.

Alongside plenty of bullishness, Wall Street did not forget to point out the risks. Monness’ Brian White spoke of the concerning developments on the antitrust war front, citing the Seattle company as a potential key target of the proposed Ending Platform Monopolies Act.

Where Wall Street stands

Until recently, Amazon was a unique stock in the sense that every analyst that covered it had a stock price target above market level. With AMZN having climbed in the past few weeks, some of the gain potential has already been captured.

However, Wall Street is still overwhelmingly bullish: 30 strong buys and 4 buys out of 34 analysts, according to Stock Rover. The consensus price target is 21% above current share price.

Figure 3: AMZN consensus analyst rating.

Figure 3: AMZN consensus analyst rating.

Twitter speaks

Amazon stock rallied 8% in June alone, ahead of its Prime Day event. What do you think this means for share price performance in the next couple of weeks? Leave your opinion below and follow @AmazonMaven on Twitter!

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Amazon Maven)