WISH - Amazon rallies on record Prime Day; Peers also trade higher

2023-07-13 13:27:01 ET

Amazon ( NASDAQ: AMZN ) rallied 2.5% on Thursday afternoon after saying that Tuesday was its biggest sales day in its history.

U.S. online sales during the event rose 6.1% to $12.7B from 2022, according to data compiled by Adobe Analytics, Reuters reported. Shoppers spent $6.3 billion on the second day alone.

Amazon said Prime members bought more than 375 million items worldwide and saved more than $2.5 billion on several deals over the two-day event. Average order size rose to $54.05 from $52.26 last year, according to data firm Numerator, Reuters reported .

Other internet retailers rallied, including ContextLogic ( WISH ), which rose 9.7% , PDD Holdings ( PDD ), up 4.9% , and JD.com ( JD ), increasing 4.2% . Chewy ( CHWY ) rose 1.4% , Etsy ( ETSY ) was up 2.7% and The RealReal ( REAL ) jumped more than 11% . Newegg Commerce ( NEGG ) rose 3.5% and Overstock.com ( OSTK ) rose 3.1% .

Back-to-school

Notably, the second day saw an increase in sales of back-to-school items, according to Vivek Pandya, an analyst at Adobe Digital Insights. Stationary and office supply sales rose 76% on July 12 compared to average daily sales in June, Reuters reported.

The sales come as consumers are expected to spend record amounts for back-to-school and back-to-college shopping this year, according to an annual survey released by the National Retail Federation and Prosper Insights & Analytics .

Back-to-school spending is expected to reach a record $41.5B, up from $36.9B last year. Back-to-college spending may reach $94B, about $20 billion more than last year’s record.

This increase in spending is primarily being driven by demand for electronics, as 69% of back-to-school shoppers expect to buy electronics or other computer-related accessories, up from 65% last year and the highest in the survey’s history. Total spending on electronics is expected to reach a record $15.2 billion.

Up 20%

Wells Fargo noted that Amazon sold 375M units this year versus 300M in 2022, indicating GMV growth of more than 20%.

“Strong Prime Day could represent demand 'pull-forward', but believe it's likely a positive read-through on 3Q revenue trajectory (WFSe +10%),” Wells Fargo analysts led by Ken Gawrelski wrote in a note. “Adobe projected 6-7% growth, though we believe that estimate is irreconcilable with reported figures.”

Adobe reported that consumers were most enticed by discounts of 14% for electronics and 12% for apparel and toys.

Amazon ( AMZN ) may have hit records with this Prime Day event, but competition is also rising, Jefferies analysts led by Brent Thill wrote in a note. The firm cited Walmart's Deals for Days July 10 to 13, and Target Circle Week July 9 to 15, among many other competing retail events.

Nonetheless, Jefferies said shares remain attractive even after a 56% increase year-to-date.

“We see further runway for shares driven by a combination of upside to consensus and multiple expansion,” Jefferies analysts said.

Cowen, which has an Outperform rating on the company, was similarly positive on AMZN and expects the company to beat estimates on revenue and operating income when it reports second quarter earnings later this month.

More on Amazon:

• Amazon: Many Opportunities For Growth
• 3 Big Reasons We Remain Cautious On Amazon
• Retail buzz: Amazon sets Prime Day sales records
• Retail sector outperforms as investors eye Amazon Prime Day spillover

For further details see: