Amazon's Big Deal Days Boosts Sales Despite Consumer Spending Challenges, Analyst Says

JMP Securities analyst Nicholas Jones reiterated Amazon.com Inc AMZN with a Market Outperform and a $175 price target.

Amazon.com's Prime Big Deal Days event saw tremendous success compared to last year, with household spending increasing Y/Y during the event despite mounting consumer spending headwinds. 

Also Read: Amazon Prime Members Save Big, BofA Holds Bullish Stance Amid Stock Fluctuations

Both visits and DAUs increased Y/Y compared to the previous year's Prime Early Access Sale. Similarly, this year's event drove a more considerable uplift in visits and DAUs over their respective 30-day trailing averages than last year's event. 

With AMZN reporting over 150 million items being sold from 3P sellers, increasing utilization of its fulfillment network may drive upside to margins in 4Q. 

Jones views this year's event favorably and looks for additional commentary on AMZN's upcoming earnings call on consumer spending trends. 

The total spend per household increased from $117 last year to $124 this year. Given the macro headwinds facing consumers and Walmart Inc WMT also running an overlapping holiday kickoff sale, Jones is not surprised to see 55% of AMZN shoppers compare prices at other retailers.

While Jones is impressed with the success of AMZN's Prime Big Deal Days event, he does not view it as a material incremental benefit to revenue but rather an elongation of holiday spending. 

Still, driving higher 3P sales, increasing utilization of its fulfillment network, and stretching out the holiday season may provide upside to margins in 4Q.

During Prime Big Deal Days, Peloton Interactive, Inc PTON ran discounts of $350 and $500 for the Bike and Bike +, respectively, up from $300 and $350 discounts during Prime Day earlier this year. 

On Prime Big Deal Days, Peloton's total purchases on Amazon for the Original Peloton Bike and Peloton Bike+ rose to +4K and +900 for the month compared to the previous Prime Day of +100 and +50 bikes within the month over a similar time period. 

For context, Jones projects 152K gross adds for 2Q24, implying Prime Big Deal Days could account for 2.6% of the quarter's projection.

Jones projects Q3 revenue of $140.90 billion vs. consensus $141.48 billion.

Price Action: AMZN shares traded higher by 1.97% at $132..35 on the last check Monday.