Social Media and 'Buy Now, Pay Later' Trends Influence Amazon's Record-Breaking Prime Day: Analyst

JMP Securities analyst Nicholas Jones reiterated Amazon.Com Inc AMZN with a Market Outperform and a $140 price target.

Despite a challenging consumer environment, the annual Prime Day event saw record GMV and unit sales. 

AMZN reported more than 375 million items sold worldwide (+25% Y/Y), and according to Digital Commerce 360, Prime Day GMV increased to $12.7 billion, an increase of more than $600 million from 2022. 

The extension of Prime Day to 3P merchants using Buy with Prime may add upside to 3Q margins through increased utilization of its fulfillment network. 

AMZN held its annual Prime Day event last week on July 11-12, with AMZN noting that July 11 was the single most significant sales day in its history. 

The consumers saved over $2.5 billion, also a record. 

Buy now, pay later continues to be famous for consumers, with Digital Commerce 360 reporting a 20% increase in BNPL Y/Y, accounting for 6.5% of orders. 

Further, consumers continue to be cautious about spending, with Numerator reporting that over half (54%) of Prime Day shoppers compared prices at competitors. 

This year members shopped deals beyond AMZN with Buy with Prime and AMZN, inviting merchants to participate in promotional activities in connection with Prime Day deals on their sites. 

AMZN reported that these merchants saw a 10x increase in daily Buy with Prime orders and an 8x increase in daily revenue from those orders during Prime Day. 

Visits during the Prime Day event were 45.5% higher than the 30-day trailing average, in line with last year's event and more significant than 2020 and 2021. 

Further, during Prime Day, DAUs reached an all-time high, supporting the Adobe Analytics report that 45% of orders were made on smartphones, up from 41.5% last year. 

With traffic only down slightly Y/Y but sales hitting a new high, Jones believes consumers continue to find value in AMZN's Prime Day event, particularly as consumer headwinds persist. 

The analyst does not expect meaningful movement in AMZN's shares in response to Prime Day. However, recall that AMZN introduced its first-ever Early Access Sale last year, and if announced this year, it may provide additional upside in 4Q.

Peloton Interactive, Inc PTON ran a $300 and $350 discount on the Original Bike and Bike+, ranking #2 and #17 among Amazon's best-selling exercise bikes.

Specifically, videos tagged with #primeday, #primeday2023, and #amazonprimeday2023 were viewed +400 million times on TikTok, as the analyst believes consumers are increasingly turning to social channels to find the best products and deals. 

Price Action: AMZN shares traded lower by 0.23% at $133.25 on the last check Tuesday.

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