After failing to break through for several consecutive months, Amazon’s stock price has approached a historical high due to Prime Day.
Analysts estimate that Amazon Prime Day sales in 2020 will reach between 9 billion and 10.5 billion US dollars. As the economy reopens, the sales boom may encourage consumers to spend more during this time, and these consumptions have excess savings. Adobe Analytics believes that the expenditure may reach 11 billion US dollars.
Amazon’s (AMZN) share price has risen in six of the past nine trading days and is currently only 1.3% below the historical peak set in September 2020. But there are several reasons why Prime Day may not help the company’s stock price as much as people expected. First, the impact of the pandemic on the disruption of the global supply chain. Some independent sellers stated that they were unable to provide typical promotions. Fear of not being able to meet customer needs and rising cost of global cargo transportation were the most frequent reasons.
These problems come as Amazon is trying to enhance the role of independent merchants in the event, which included more than 1 million global discounts last year. Third-party sellers account for nearly 60% of Amazon’s $236 billion in annual retail sales. Amazon’s stock price is also facing broader pressures as investors weigh in on signals that the Federal Reserve may raise interest rates sooner than expected.
For a fast-growing company like Amazon, the lowest price is a boon. They help keep government bond yields extremely low, thereby increasing interest in riskier investments, such as stocks that provide better returns.
As interest rates rise in the next few years, investors may start to consider depositing funds elsewhere. Some people are already making this choice.
Amazon’s stock price has risen by only 7% so far this year, far below the 76% increase in 2020. After rising by 81% last year, Apple’s stock price actually fell by 1.7% in 2021. Some large technology companies performed better. Google’s parent company Alphabet (GOOGL) has risen 37% so far this year, surpassing last year’s 31% increase.
But it is clear that Amazon is struggling with a shift in mood – even if its 2021 Prime Membership Day is a success.