How does Prime Day Affect the Stock Prices of Amazon?
One of the most valuable corporations in the world, Amazon (AMZN), has a market valuation of more than $1 trillion. Introducing new items and purchasing similar businesses are two ways Amazon has kept expanding. Amazon Prime is one such item. Subscribers to this subscription program receive benefits like free two-day shipping on purchases, access to movies, music, and more. Because of the popularity of Amazon, Amazon decided to provide its subscribers another benefit. To commemorate 20 years in business, It was established in July 2015.
What is Prime Day?
The multi-day Amazon Prime Day event is a time when the giant retailer offers a variety of deals to Prime members only. Shoppers can get discounts on everything from clothing to kitchen appliances during Prime Day, which normally lasts 48 hours. The October Prime Early Access Sale, according to Amazon, is taking place in 15 nations, including Canada, Italy, Turkey, and more. On the other hand, Prime Day in July was accessible in more than 20 nations.
Beyond merchandise discounts, Prime Day offers numerous advantages. Additionally, Amazon frequently provides a range of incentives and discounts before, during, and after the event. For instance, Amazon provided a Stampcard before to July’s Prime Day, allowing customers to earn $10 in credit by performing actions like viewing TV episodes or using Prime Reading. The Amazon Prime credit card has previously provided additional benefits.
According to experts, the auction in October will probably be pretty similar to the one in July. Porwal warned that there would be fewer options for bargains because it’s the second Prime Day-like event in a year — a novel idea to Prime members and Amazon retailers. To be able to defend big price cuts, Porwal noted that Amazon merchants “need to perceive the value and hype in this’second Prime Day’.”
Since the time between October’s event and July’s Prime Day, which was the retailer’s most profitable one to date, is so short, Amazon’s next sale is an experiment for the company, which will be keenly monitoring how customers react.
About Amazon’s Pre-Prime Day Stocks
The first table below lists the gains or losses that can be made by purchasing Amazon.com, Inc. (AMZN) shares at the close the day before Prime Day and then selling them at the close one day, five days (one week), or twenty days (one month) later. The outcomes are unimpressive and result in a cumulative loss over all time periods. If, during the previous seven years, your trading technique had been to purchase at the close on the day before the sale and to sell one day, one week, or one month later. There are negative returns for each time period.
|Date||Day 1||Day 5||Day 10|
| 7/13/2015|| -0.14||0.31|| 1.78|
| -0.20|| 1.51|
|7/10/2017|| 0.12|| 0.84||0.79|
| -0.02|| 5.32|
| 7/15/2019|| 1.00||2.08|| 7.57|
| -12.90|| -15.28|
| 6/21/2021|| -0.13|| -1.23|| 10.32|
| TOTAL||0.65|| -6.28|| 35.81|
About Amazon’s Post Prime Day Stocks
In each of the seven years, the second table shifts the time at which shares are purchased by around one month before peak day. This will serve as a comparison for a seemingly random time period. We can observe that outcomes for all time frames are somewhat improved by this arbitrary time span. Days are pushed back or forward to the next trading day (when dates fall on a weekend). The average outcomes for the one-day method are marginally $0.65 better than the outcomes for the post-sale period, which are -$1.53. Results for the one-week strategy are also marginally better than those for the post timeframe, coming in at -$6.26 as opposed to -$10.81. The results are most spectacular when held for a month prior to the sale time, with gains of $35.81 as opposed to losses of -$8.27 during the post-sale time.
|Date||Day 1||Day 5||Day 10|
| 7/12/2016|| -0.56|| 0.69|| 0.73|
| 7/10/2017|| 0.77|| 1.56||0.67|
| 7/16/2018|| 1.50||0.81|| 5.33|
| 7/15/2019|| 0.05|| -1.27|| -11.30|
| 10/13/2020|| -5.22|| -12.90|| -15.28|
| 6/21/2021||0.85|| -1.93||7.56|
|TOTAL|| -1.53|| -10.81|| -8.27|
So should you buy Amazon Shares?
Does this imply that you should buy Amazon shares as your first Prime Day purchase? No and yes. Strong Prime Day results will probably increase Amazon share price. Therefore, investors will gain in the short run. However, if you wait to purchase Amazon shares until a few weeks or months from now, you won’t lose out. Over time, investors will gain even more from Amazon. Over the past few years, annual earnings and revenue have been increasing, and as of 2018, they have truly taken off.
The popularity of online purchasing was rising before the coronavirus pandemic. According to a Statista analysis, global online sales increased by 19% to $3.53 trillion last year from the year before. I anticipate that e-commerce will continue to be well-liked even after the coronavirus because of the consumer’s new online shopping habits and perspective on in-store visits.
Thus, Amazon stock is a fantastic pre-Prime Day offer and a reliable long-term investment, even at a higher price.