It’s Amazon Prime Day Again – Here’s How The Stock Market Reacted

Key Takeaways

• Amazon Prime Day is here again, and they’ll be looking to top their record sales of 300 million products from last year
• The company’s stock price has generally increased by a sizable amount in the month after the day, rising on average 4.4%
• Amazon stock was up 1.3% after the first day of the Prime Day sales

It’s Amazon’s version of Christmas, and just like Santa, it comes around every year. No we’re not talking about Jeff Bezos getting a new yacht, we’re talking about Prime Day.

It’s the day (or days, to be precise) where Amazon offers up hot deals on a wide range of products to entice shoppers into a spending spree. And generally, it’s a pretty successful tactic.

For consumers it offers up the chance to pick up a potential bargain, but it’s a day to watch for investors as well. Obviously anytime there’s a flurry of activity around a particular company, the market tends to stand up and take notice. It happens for Amazon on Prime Day, Apple at their annual Worldwide Developers Conference and Tesla, well, every time Elon Musk tweets something outrageous.

So what’s the lowdown on this year’s Prime Day, and how has the stock price reacted to the sales?

Big sales events are just one of the ways that line retailers look to get a leg up on their competition. Tech is a cutthroat sector of the market, and it’s difficult to tell who’s going to give investors the best returns. That’s where Q.ai’s Emerging Tech Kit comes in, using the power of AI to comb through huge amounts of data to predict the performance and volatility of a range of different tech stocks and ETFs.

Every week the Kit is rebalanced in line with these projections, meaning investors are always ahead of the curve.

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Just how big is Prime Day?

It’s big, and it gets bigger every year. In 2022, Prime members purchased over 300 million items worldwide, which equates to around 100,000 items every single minute. Some of the biggest deals to be had are on Amazon’s own products, which now encompasses a wide range of brands and categories including Ring home security, Echo smart speakers and Prime Fire TV devices.

And it gets bigger every year. Go back just a few short years to 2018, and it was 100 million products sold. That’s triple the sales volume over the space of the past five years, with consistent growth year on year.

Going on that trend, we can expect it to be even bigger this year.

How does Prime Day impact Amazon’s stock price?

We all know the old investment saying – past performance doesn’t guarantee future results. But nevertheless, it’s interesting to look at how Amazon stock has performed when Prime Day has rolled around in the past.

The short version is that Prime Day generally has a positive impact on the Amazon share price. Based on figures from Dow Jones Market Data, we can see that from 2015 to 2022 Amazon’s share price has gained an average of 0.4% the day after Prime Day, 1.3% the week after and 4.4% after a month.

That’s a solid result for a company that is already one of the most valuable in the world.

But how is Prime Day for 2023 stacking up so far? Well we’ve still got today to go, but it was off to a good start. Amazon’s share price closed up 1.3% yesterday to get the first day of Prime ‘Day’ off to a cracking start, with things looking good so far on the second and final day with Amazon stock up over 1% in pre-market trading.

How is Amazon performing more broadly?

Like most tech companies, 2022 was pretty brutal for Amazon’s stock price. After soaring during the pandemic years, shareholders saw the value of their holdings drop by over 50% last year.

2023 has been a different story though, with Amazon falling in line with much of the sector in driving major efficiencies in their business. Including, unfortunately, through mass layoffs.

But cutting costs has been received favorably by the market, as the company’s stock price has gone on a tear this year, gaining over 50% year to date. Of course, as one of the world’s biggest retailers, Amazon would seriously feel the pinch if the US was to fall into a recession, so shareholders will be watching the economic data and the Fed’s interest rate decisions very closely in the coming weeks and months.

In other Amazon news

With a company as big as Amazon, there’s always plenty going on. Right now one of the companies biggest challenges is their proposed acquisition of iRobot, the company behind the Roomba robot vacuum cleaner.

Regulators all over the world have been iffy about this deal, from the US FTC to the UK regulator, and now it’s the EU who are taking a closer look at it.

The main concern from the regulators is the potential to damage competition, leading to worse outcomes for consumers. That’s relevant to the other vacuum manufacturers out there like Shark and Dyson, but more broadly, having access to iRobot data means Amazon would be able to gather schematic data from people’s homes.

That’s a serious advantage over other online retailers. Still, antitrust concerns are never far from the surface once a company gets to be the size of Amazon, and shareholders are unlikely to be worried about this latest hiccup.

The bottom line

Prime Day is one of the biggest shopping days of the year, and it’s a key driver for Amazon in the generally quieter summer months. This year is looking like no exception, with the stock price jumping over the couple of days of the event.

For investors it’s unlikely to change the outlook for the company, but it’s always worth watching consumer trends and how they might change over time.

Q.ai’s Emerging Tech Kit gives investors exposure to stocks like Amazon, but uses AI to predict performance and volatility for the upcoming week, before rebalancing the Kit in line with those projections. But of course it’s not just Amazon our AI looks at, combing through huge amounts of data to predict the performance and volatility of a range of different tech stocks and ETFs.

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