Amazon Extends Prime Day

The technology giant Amazon (Ticker Symbol: AMZNWealth Strength IndexAMZN is Extremely Flat and trending Up) announced that the company will be extending Prime Day by an additional day this week.  Amazon Prime Day will run from July 15th at midnight until July 16th at 11:59 p.m. Despite a glitch causing servers to go offline temporarily, Amazon sold 100 million products on Amazon Prime Day last year.  Some of the best sellers from last year’s Prime Day were Amazon’s own products like the Fire TV stick, Echo Show, and the Echo Spot. On this day, Amazon Prime members are allowed to buy extremely discounted products.  The majority of products will be on sale although some goods will have limited quantity and can sell out quickly, causing a Black Friday-esque rush, with consumers competing to buy goods as quickly as possible.  

Amazon showed another monster earnings beat in late April. They reported earnings per share of $7.09 vs. Wall Street analysts’ expectations of $4.72.  Revenue came in right in line with analysts’ expectations at $59.7 billion. However, Amazon did decrease their guidance for the next quarter. The major news during the release came in the announcement that its Amazon Prime members would now be receiving free one-day delivery. 

Amazon’s stock took off to a phenomenal start to 2018, rallying over 70% in the first three quarters led by a string of great earnings and revenue beats. The stock ticked to an all-time high of $2,050.50 on September 4, 2018.  After failing to break out above its all-time high, the stock formed a double top reversal pattern. This happens when the price of a particular stock sets a high price, has a moderate decline, and then retests that high failing to break above it.  The pattern is confirmed once it breaks below the low between the two prior highs. Following this pattern, the stock then proceeded to give back over 50% of its gains in the fourth quarter of 2018.   

In that same quarter, the stock bottomed, forming a bullish divergence pattern, as indicated on the chart by the purple squares, where the stock makes a lower low in price but the Relative Strength Index makes a higher low. Amazon stock had a positive start to the year in 2019.  The stock spent roughly three months forming a horizontal price channel that it finally broke out of in late in the first quarter of 2019. After breaking out of its horizontal price channel, the stock traded through its 200-day Moving Average and is currently trading positively for the year. 

(Chart above courtesy of ​www.tipranks.com​)  

Based on a survey of 36 analysts offering 12-month price targets, the average price target for Amazon’s stock is $2,245.47. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $1,913.90.  

Amazon has over 100 million Prime members worldwide and the company states that it has over 100 million items that are currently available for free two-day shipping. With Amazon Prime Day now lasting two days, Amazon will be looking for over 150 million products to be sold.  Amazon Prime Day will be available in the following countries: U.S., U.K., Spain, Singapore, Netherlands, Mexico, Luxembourg, Japan, Italy, India, Germany, France, China, Canada, Belgium, Austria, and Australia, with an additional location this year of the United Arab Emirates, which will be celebrating Amazon Prime Day for the first time.  Investors in the tech giant should look to Amazon’s next earnings release on July 25, 2019 for fresh news within the company.  

 


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