Will Prime Day Results Move Amazon's Stock?

Amazon.com, Inc. AMZN’s share price has surged to new all-time highs in anticipation of this year’s Prime Day, which kicked off on Tuesday morning. But will the numbers from this year’s mega-sale actually move Amazon’s stock higher, or should traders sell now and lock in their 27 percent three-month gains?

This year’s sale is only the second of its kind for Amazon, so there’s not much of a history to look to for guidance. Last year, Amazon launched its first-ever Prime Day on July 15. Much like this year, the company’s stock gained more than 20 percent in the three months leading up to the sale.

Last year, after initial reports that customers were not pleased with the quality of many of the items on sale, Amazon officially revealed that customers had ordered 34.4 million items, 18 percent more than on Black Friday 2014. If last year is any indication, those official results could come as soon as tomorrow.

Related Link: How Did Amazon's Stock Perform On Last Year's Prime Day?

In the week following last year's Prime Day, Amazon’s stock soared another 5.8 percent.

Ultimately, Prime Day 2015 added $375–$400 million to Amazon’s Q3 revenue, enough to single-handedly boost growth by around 2 percent on the quarter.

This year, expectations are even higher, which could be bad news for the stock if Amazon doesn’t deliver. What exactly will it take to impress the market?

MKM’s Rob Sanderson is expecting Amazon to double the sales it produced during last year’s sale, which could boost its Q3 e-commerce revenue growth by 3.5 percent.

“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,” Sanderson wrote last week.

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

He noted that Prime membership rose 51 percent in 2015.

If Sanderson’s expectations are any indication of what the market wants from Amazon this year, Prime Day won’t need to break last year’s records — it will need to double them.

Amazon’s stock opened mostly flat on Tuesday morning. MKM has a Buy rating and $850 price target for Amazon.

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Disclosure: The author holds no position in the stocks mentioned.