Amazon remains ‘top idea’ at J.P. Morgan on Prime Day, early holiday shopping optimism
On Wednesday, J.P. Morgan analyst Doug Anmuth reiterated his overweight rating on shares of Amazon because of optimism around the e-commerce giant’s upcoming Prime Day (from which it projects $7.5 billion in revenue) and early holiday shopping season. For these reasons, Amazon remains a top idea at the firm.
Video Transcript
[MUSIC PLAYING]SEANA SMITH: Welcome back to “The Final Round.” Let’s get to our call of the day. And taking a look at Amazon shares popping here up to almost 3% with just around a half hour to go in the trading day. Now this comes on the heels of a bullish call from JP Morgan. JP Morgan reiterating their overweight rating on the stock, saying that Amazon remains a top idea.
And Dan, JP Morgan basically making the argument here about the timing of Prime Day, saying that by the fact that Amazon delayed three months to next week– and we know that this is because of the pandemic, but they’re saying that’s going to help the company with this jumpstart to the holiday shopping season.
DAN ROBERTS: Yeah, you know, none of this is very shocking to me. I don’t think this is a unique or bold call. And in fact, you know, JPM is calling for $7 and 1/2 billion in Prime Day revenue, which would be 42% higher than last year’s. I’ve seen other estimates that said even closer to 10 billion in revenue from Prime Day.
And I should mention our friends over at our sister site, Tech Crunch, had a story yesterday that ran. And it said despite the pandemic, Amazon Prime Day projected to bring in $10 billion. And I retweeted it and said, no, not despite the pandemic– because of the pandemic.
I mean, let’s make sure we mention here, e-commerce sales have been surging for a lot of names, not just Amazon or Walmart, Target, Best Buy. We’ve talked this to death. I just think it’s self obvious, sort of not counterintuitive to think that this is going to be a blowout Prime Day.
People are at home, people are shopping online. There might be things that they’ve waited to buy because they want to see a deal. And so I think unsurprising. And 42% sounds like a big number of growth over the last year. But I think it makes a lot of sense. And of course, that’s just by focusing on Prime Day, not to mention the myriad other reasons we’ve seen some bullish calls on Amazon in the last few months.
MELODY HAHM: And then, of course, it’s just a further sort of blurring of what the holiday season looks like, right? Over the last couple of years, we have all been confused as to if the holiday shopping season starts on Thanksgiving, if it’s before, or if it actually is the summer, right, when Amazon Prime Day typically is.
I think this just shows that Amazon gets to dictate the rules, to a certain extent, of what that calendar can now look like, and also what sort of the rules that have been thrown out the window because of this pandemic. To Dan’s point, I think a lot of people have been self gifting themselves things during this time, whether it’s buying that Peloton earlier than the holiday season or waiting for their spouse to gift it to them.
So, again, it unfortunately, or fortunately, just ends up benefiting Amazon. And I wanted to point out one other thing that JP Morgan called out. We should keep an eye on the stocks, Chewy, eBay, StitchFix, for additional kind of intense deals that come out from those retailers typically during the Primazon– Prime period. And I expect even though it has been pushed back, we can expect a similar sort of discounting model to continue.
DAN ROBERTS: Primazon, that works, Melody, too. And guys, I’m glad Melody mentioned self gifting because just quickly, anecdotally, we’re an example. We’ve been in the market for a new TV for almost a year. And we kept saying to each other, my wife and I, well, let’s just wait until Black Friday or Cyber Monday.
And then I realized, well, none of those things have any meaning anymore. Why wait for Cyber Monday? We could do it on Prime Day, or we could do it tomorrow. I mean, there’s just no reason to wait until what used to be a big discount day.
SEANA SMITH: Yeah, that’s certainly true, especially now with so many retailers here forced to cut prices, just in order to compete.
