What Is Amazon Prime Day and What Does It Mean for Investors?
There’s No stopping Amazon.com, Inc. (NASDAQ:AMZN) Stock’s Rise
The countdown is on for the big Amazon.com, Inc. (NASDAQ:AMZN) stock “Amazon Prime Day” sale, an event that is to online shopping what Black Friday is to shopping mall visitors. The sales are big and the virtual checkout counter will be ringing in the cash. But what does that mean for Amazon stock?
It’s difficult to put an actual premium on a single event, no matter how strong the sales numbers are. The fact is that Amazon stock is already one of the strongest retail companies on the market. Therefore, it will be difficult to even determine what affect Amazon Prime Day has—if any—on AMZN stock. Simply put, Amazon stock is already setting new record-highs by the week.
At the end of June, AMZN stock was trading at approximately $726.00 per share. It dropped to $696.00 in the wake of the Brexit referendum. Had you bought AMZN then, you would already have made at least $45.00 per share. This is especially true considering that since June 27, AMZN has recovered all of its pre-Brexit strength and beyond to hit a new record-high of $743.00 on the day Amazon “Prime” buzz is hitting a peak.
This is a good thing, my friends. Amazon stock has organic strength built into it. It does not need a sales promotion like Amazon Prime Day to boost its fortunes. In that sense, Amazon Prime Day is much more of a customer-focused event, rewarding customers more directly than investors.
Amazon’s Prime sale is different from Black Friday, as that occasion implies more hype than bargains in order to improve the Christmas season sales figures for retail stocks. Amazon has become so successful that it competes only against itself.
Amazon Prime or not, analyst Rob Anderson from the prestigious MKM Partners firm believes Amazon stock will hit a share price of $1,300 by 2020. (Source: “Amazon’s stock can hit $1,300 in 4 years—MKM analyst,” MarketWatch, December 15, 2015.)
There is a slight problem with that $1,300 price target: it may be too low.
Based on the past two weeks alone, Amazon has gained more than $40.00. Applying that rate of increase over the next four years would give us an increase of $1,040 per year, pushing the valuation of Amazon stock to almost $5,000 per share by 2020.
Of course, this is an exaggeration and the calculations analysts use are far more complex. Still, it is an exaggeration based on an actual and verifiable measure of Amazon stock’s recent performance, which, if nothing else, gives plenty of credibility to claims that Amazon stock is heading for $1,300 by 2020.
But back to Amazon Prime Day…
On July 12, 2016, Amazon Prime members will have 24 hours to take advantage of exceptional discounts on thousands of items in 26 categories, including high-tech. The sales begin at 12:00 a.m. Friday. The big novelty for this year is that Amazon has expanded the period in which sales will be offered, with deals starting the week before the official Amazon Prime Day sale.
Amazon wants to make this day the ultimate sales event of the summer. It could end up being the ultimate sales day of any kind, anywhere.
Amazon investors can simply rest assured that their investment keeps growing thanks to Amazon.com’s relentless ambition. There’s little doubt that Amazon Prime Day will be successful and there’s little doubt Amazon stock will rise. Of course, it would have risen regardless.
The takeaway for investors is this: Amazon has a bullish path ahead. This is one bull you do not want to fight; Amazon stock is the kind of bull stock that turns bullfighters’ wives into widows.
