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Is the Amazon share price past its Prime?

The Amazon share price [AMZN] has fluctuated through 2021 so far. The stock made gains of 2.1% through to 18 February before crashing to $2951.95 by 8 March, closing the day 9.4% below where the Amazon share price opened the year. This was followed by a strong rally which saw the Amazon share price gain 17. 6% in a month and a half to close 29 April at $3,471.31, 6.6% above its January opening price.

While another crash brought the stock down to $3,151.94 by 12 May, a subsequent rally has seen the Amazon share price gain 11.16% through late May and June, to close 25 June at $3,401.46. This represents gains of 4.4% through 2021 so far and is an increase of 23.5% on the Amazon share price a year previously.

With Amazon Prime Day 2021 complete, investors will be keen to see the impact of the event on the Amazon share price.


Sales on Fire

Amazon Prime Day 2021 was heralded in the build-up as the biggest to date, with discounts and reductions offered on over two million items over the 48-hour event.

However, in terms of results, the company itself was a little more restrained in the event’s aftermath. Previous years’ events have been described with superlatives like the “largest shopping event in Amazon history”, but Amazon this year summed the event up merely as the “two biggest days ever for small and medium-sized businesses”.

Amazon never publishes total Prime Day takings, but last year announced that third-party sellers made $3.5bn. The equivalent figure has not been disclosed this year. However, Amazon revealed that small businesses took in $1.9bn in the two-week period leading up to Prime Day, thanks to a Spend $10, Get $10 promotion. This represented a more-than 100% year-over-year increase compared to the equivalent promotion for October’s Prime Day 2020.

Amazon stated that over 250 million items had been purchased by Prime members worldwide, including a splurge on back-to-school goods including 600,000 backpacks, one million laptops, one million headphones, 40,000 calculators, 220,000 Crayola products and 240,000 notebooks.


Number of items purchased by Prime members on Amazon's Prime Day


Amazon’s own products performed strongly, with the Fire TV Stick 4K with Alexa Voice Remote the most popular item. Record numbers of Fire TVs were sold during Prime Day and the two-week build-up, while Amazon Fire tablets sold in their hundreds of thousands.

While Amazon doesn’t disclose sales figures directly, Adobe Analytics estimated that sales totalled $11bn across the two days. This will have made 21 June and 22 June the first- and second-busiest days, respectively, for online sales this year.

If correct, this would have made this year’s event the largest Prime Day ever, with e-commerce transactions 6.1% higher than the $10.4bn generated by 2020’s event, but growth may have been slower compared to previous years. 2020’s total was a 45.2% increase on 2019’s haul of $7.16bn.

The Amazon share price fell 2.3% over 13 and 14 October 2020, when last year’s event took place. However, this year, the 48-hour event saw the Amazon share price increase 0.5%.


Valuation of transactions from Prime Day 2020


Just for CLIX

The e-commerce space will welcome the boost that Prime Day has brought, not just to Amazon but across the sector, with competitors often running parallel promotions to the event.

Ecommerce enjoyed a bumper 2020, with in-person shopping falling off a cliff in the wake of the coronavirus pandemic, but as global recoveries gather pace, the sector is beginning to suffer.

The ProShares Long Online/Short Stores ETF [CLIX] peaked at $103.42 on 12 February and has since fallen 18.8% to close 25 June at $84.01, despite a rally that has seen it recover 13.4% since bottoming out on 13 May. The Amazon share price has considerable bearing on the fund, with the stock comprising the fund’s largest holding at a massive 22.13% of its weighting as of 25 June.

Other e-commerce ETFs with a lower weighting towards the Amazon share price have fared better of late. Amazon is the 31st-largest holding in the Amplify Online Retail ETF [IBUY] at just 1.68% of the fund’s market value, as of 28 June. The ETF has outperformed the ProShares Long Online/Short Stores ETF considerably this year, gaining 13.3% through to 25 June.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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