Amazon Prime Day arrives next month and it could be a big one for Amazon.com, Inc. (NASDAQ:AMZN) stock. Last year’s Prime Day actually forecast a bit of a top for Amazon stock.
Amazon hit an all-time high just a couple weeks after last year’s Prime Day at $1,083; it would quickly dip below $1,000 and stay there pretty much through late October.
Of course, those sub-$1,000 prices turned out to be a buying opportunity. Q3 results in late October would catalyze a massive run in Amazon stock, which now has risen 77%.
With valuation starting to become a concern even for bulls like myself, Amazon’s 2018 Prime Day could represent another near-term top if the company doesn’t deliver big.
When Is Amazon Prime Day 2018?
Amazon hasn’t officially announced when Amazon Prime Day will take place this year. But a banner on an Amazon site in the U.K., apparently published in error showed the date as Monday, July 16.
The date, if it’s correct, is a bit of a change. It’s later than the past two years – and it also starts on a Monday, instead of on a Tuesday, as was the case in 2016 and 2017.
According to TechRadar, which highlighted the banner last week, the shift makes some sense, given that the World Cup semifinals could steal some of Amazon’s thunder the week before.
And the site sees the offers in the U.S. as lasting some 39 hours, starting around noon Eastern on the 16th.
What Investors Should Be Watching For
Prime Day itself isn’t necessarily a huge mover for Amazon stock. But it’s still an event that investors should pay close attention to.
Last year’s Prime Day was a huge hit: the company said business rose 60% year-over-year, with a huge increase in shopping by Prime members.
That success clearly benefited Q3 results on its own. It also gave Amazon momentum through the quarter, which led to the big October numbers and jump-started the recent rally.
Similar success this year could have a similar effect. But Amazon will have a tough comparison, and any signs of weakness in Prime Day interest or revenue could signal a weaker Q3.
And at the current valuation, Amazon stock could struggle if there’s any evidence that its unprecedented sales growth is slowing.
But what will also be important is which deals Amazon pushes on Prime Day. No doubt, discounted Prime memberships will be a part of the offering. Given a recent price hike for Prime, the nature of those discounts will be worth watching.
If Amazon is offering slim discounts, its Prime base, which is a big part of its long-term strategy, likely is performing well. If those discounts are notably large, however, it could mean that Amazon wants to win back some customers lost to the higher price.
There are a host of other interesting questions. Can Echo extend its apparent dominance over Alphabet Inc (NASDAQ:GOOGL,GOOG) product Google Home? Will Amazon Fresh be a part of the event?
That new rollout is a big one for the company and for grocery rivals like Kroger Co (NYSE:KR) and the soon-to-be-merged Rite Aid Corporation (NYSE:RAD) and Albertson’s.
To what extent will Amazon Marketplace partners be a part of Prime Day? And will Amazon push any of its newer, smaller initiatives like Amazon Prints, Prime Video, Amazon Music, or even its B2B offerings?
Who Else Will Be Watching?
It’s not just Amazon investors who should be watching Prime Day closely. Rivals like Walmart Inc (NYSE:WMT) likely will roll out their own promotions.
And some manufacturers may see Prime Day as a way to boost revenue or clear inventory. GoPro Inc (NASDAQ:GPRO) and Fitbit Inc (NYSE:FIT) both could use Amazon Prime Day as a way to move product.
Which companies take part in the event (and at what price) could also give signals as to the health of their businesses.
For savvy consumers, Amazon Prime Day is a big day. For investors, it’s not the biggest day of the year, or an event likely to move Amazon stock.
But there will be a lot to watch – and perhaps some interesting clues about the health of Amazon, its rivals, and some of its suppliers.
As of this writing, Vince Martin has no positions in any securities mentioned.
