Amazon Prime Day has seen a remarkable increase in gross merchandise sales since its inception. From $0.9 billion in 2015, sales have skyrocketed to $12.09 billion in 2022.
Despite being a $1.3 trillion company with an annual revenue of nearly half a trillion dollars, Amazon’s Prime Day sales of $12 billion in 2022 are unlikely to significantly impact the company’s overall value.
Investigating the impact of Prime Day on Amazon’s stock performance, we’ve analyzed various trading strategies. The results are not impressive and show a combined loss across all time periods. If a trading strategy involved buying at the close the day before Prime Day and selling one day, one week, or one month later, each time period results in negative returns.
The second table provides a comparison by moving the time shares are purchased approximately one month before Prime Day in each of the seven years. This random time frame yields slightly better results across all time frames. For instance, when dates fall on a weekend, they are adjusted to the next tradable day. Comparing the one-day strategy, the average results are slightly better at $0.65 than the post-Prime period at -$1.53. For the one-week strategy, the results are also slightly better than the post-Prime period at -$6.26 as opposed to -$10.81. The most impressive results are for the pre-Prime period of holding for one month, with gains of $35.81 as opposed to the losses in the post-Prime period of -$8.27. Here are the detailed results: Post Prime Day Trades Date 1 Day 5 Days 10 Days 7/13/2015 1.08 2.23 4.02 7/12/2016 -0.56 0.69 0.73 7/10/2017 0.77 1.56 0.67 7/16/2018 1.50 0.81 5.33 7/15/2019 0.05 -1.27 -11.30 10/13/2020 -5.22 -12.90 -15.28 6/21/2021 0.85 -1.93 7.56 TOTAL -1.53 -10.81 -8.27 Pre-Prime Day Trades Date 1 Day 5 Days 10 Days 6/13/2015 -0.14 0.31 1.78 6/12/2016 0.07 -0.20 1.51 6/10/2017 0.12 0.84 0.79 6/16/2018 0.39 -0.02 5.32 6/15/2019 1.00 2.08 7.57 7/13/2020 -0.66 -8.06 8.52 5/21/2021 -0.13 -1.23 10.32 TOTAL 0.65 -6.28 35.81 Trades are moved one calendar month back for comparison. Amazon’s financial performance is noteworthy. Even though Prime Day sales of $12 billion in 2022 seem impressive, they represent less than 3% of the company’s total revenue of $469,822,000 in 2021. This suggests that the impact of Prime Day sales on the company’s share price is minimal at best. It’s crucial to remember that the stock market acts as a forward-looking discounting mechanism. This means that the market usually incorporates all publicly available information into the stock’s price. By the time news about a particular event, anticipated by the market, is out, it’s usually too late to profit from it. Market and individual stock price shocks usually occur when unexpected information emerges.
