MKM Thinks Amazon's Prime Day Could Double Last Year's Sales

Amazon.com, Inc. AMZN has been promoting its second annual Prime Day shopping event, scheduled for July 12.

MKM Partners’ Rob Sanderson reiterated a Buy rating on the company, with a price target of $850.

The Second Prime Day

Sanderson mentioned the first Prime Day, held in 2015, led to incremental sales of $375–$400 million.

The analyst expects Amazon to double this sales figure during its second Prime Day, which would put an upward bias of 350 bps on the company’s global e-commerce revenue growth in Q3.

The current consensus forecasts are for a 300 bps deceleration in growth from Q2 to Q3.

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Expectations

Stating that the 2016 Prime Day was likely to be much larger than the inaugural event, Sanderson stated that Prime membership has meaningfully increased, with total members rising 51 percent in 2015.

“Management feels the flywheel is gaining significant momentum internationally,” the analyst said.

The analyst also pointed out that in 2015, merchants sold out quickly, but this year, they would be better prepared with adequate inventory.

“AMZN is reporting over 100k deals in 10 countries, says there will be twice as many TVs offered than Black Friday and Cyber Monday combined and has already begun to offer countdown deals into the event next week,” according to the MKM Partners report.