Amazon's Prime Big Deal Days In October To Trigger Stock Move

It was not a good idea to opt out of Prime Day as about as many brands participated in the event in 2023, according to Acadia. with 80% of its clients running deals – nearly identical to last year’s participation rate.

In 2023, participation had increased 11% over 2022. This shows that a near-saturation point of participation have been reached, where the brands with products that make sense to discount nearly always participate, while a small minority of clients sit out the holiday due to their category or other brand preferences not to participate.

Very few (roughly 1%) of clients were forced to not participate at all due to supply chain or operational hurdles. Not only were brands not sitting out, they were putting more of their catalogs on sale. More clients ran promotions for their full catalogs this year, at 41.6% versus 37% in 2023. Overall, the level of catalog enrollment increased over 2023.

This all-in approach shows that brands are more willing to blast promotions to get noticed, and speaks to the higher level of deal merchandising and media spend competition that we witnessed in 2023 when compared to years past.

Will we be seeing similar behavior? I am expecting better participation as rate cut happen mean consumer spending sentiment should increase.

In 2023, the Prime Exclusive Discounts stole the show, as coupons took a backseat. PEDs were the most implemented promotion in 2023 for Prime Day, replacing 2022’s coupon surge.

That move paid off: clients that used PEDs saw, on average, 247% more sales than 2022’s Prime Day. Brands that leveraged a blend of coupons and PEDs saw a 170% increase in sales vs. 2022, whereas coupons and Lightning Deals alone saw lifts of 114% and 110% respectively.

But October 2024 Prime Day, we should be seeing more coupons coming to help to push sales up, deployment of most promotion types were up in honor of Prime Day: Lighting Deals, Best Deals, Cross Promotions and Percent-Off Price Discounts saw more implementation to get more customers over the line.

We should be seeing a reduction in PEDs as that is still far and away the promo type that saw the largest increase in participation across our clients, with 43% of brands running PEDs.

One of the key factor to watch for Amazon is Regulation, Amazon is facing the biggest legal fight in its 30-year history. Regulators are challenging Amazon's market power and the company likely will grapple with intense scrutiny in the coming years.

On 26 September 2024, Federal Trade Commission and 17 state attorneys general filed a major antitrust lawsuit against Amazon. FTC accuses the company of using its market power to inflate prices and overcharge merchants. Amazon rejects the allegations, arguing that the FTC is "wrong on the facts and the law, and we look forward to making that case in court," the company said in a statement.

On 03 Oct, JPMorgan analyst mentioned that the lawsuit "was very much as expected, and we believe it will be challenging to prove that AMZN illegally maintains monopoly power." This lawsuit will be a long one as a federal judge set an October 2026 trial date for the case.

Last week, Amazon stock closed above its 50-day moving average for the first time since early August, offering a signal of improving strength.

Amazon's stock is still not fully recovered from the rough response to its earnings report on 01 August. Shares hit a six-month low of 151.61 in intraday trading 05 Aug, breaking below Amazon's 21-day, 5o-day and 200-day moving averages.

But shares have bounced back with a 23% gain from that early August low point. The next milestone could be a return to a $2 trillion market cap, which Amazon reached for the first time in late June.

If we looked at the MACD, we are seeing Amazon moving in a nice upside after the bullish crossover in early September, and multi-timeframe is showing strong uptrend potential.

So this might still be a good time to consider Amazon with price trending below $180.

Amazon is grappling with concerns about the economy, along with stepped-up competition for digital sales from brick-and-mortar titans Walmart (WMT) and Target (TGT), plus discount-focused upstarts like Temu and Shein.

Amazon is still yet to sustain a run beyond highs reached in 2021.

Appreciate if you could share your thoughts in the comment section whether you think Amazon would benefit from the rate cut, potentially boosting its financial performance and market position.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.