Bank of America (BoA) analysts have reiterated their ‘Buy’ rating for Amazon.com Inc (NASDAQ:AMZN) on the apparent success of the e-commerce giant’s Big Deal Days sale, which ran from October 10 to 11.
The analysts noted that, according to Amazon, Prime members saved more than $1 billion on hundreds of millions of items during the shopping event, suggesting that value shopping will be a driver this holiday season.
“2023 was the first October sales event that customers could order off-site through Buy with Prime, which helped drive more than 150 million total items from third-party sellers (including off and on Amazon) being purchased (strong 50% growth versus the 100 million third party items disclosed in October sale last year, though unit totals have been rounded),” the analysts wrote in a note to clients.
They wrote that Amazon’s recap of the event focused on delivery speeds, with “hundreds of thousands of items” delivered within four hours and the fastest delivery on the first day of the sale taking only 54 minutes.
“Amazon also disclosed that more than 13% of US shipments fulfilled by Amazon are estimated to ship without additional packaging, an opportunity for incremental cost cutting,” they wrote.
The BoA analysts estimate that about $9.1 billion in gross merchandise value was sold during the sale, compared to their estimate for last October’s sale of $6.6 billion.
“Based on our projected $210 billion in 4Q 2023 Amazon gross merchandise value, we estimate that Big Deal Days could represent approximately 4.3% of gross merchandise value for the quarter, up from last year, and could contribute 2.6 points to year-over-year growth, slightly more than last year at 1.5 points,” they wrote.
“According to early data collected by Numerator, the average order value at $53.5 was down versus July's Prime Day but up slightly from last year. For revenues, assuming a 35% take rate for third parties, we estimate $6 billion in revenue versus $4 billion last year (up 33% year-over-year).”
The analysts added that they remain constructive on the stock going into the fourth quarter and view Amazon's announcement that it plans to hire up to 250,000 employees for the holiday season, up 67% year-over-year, as a positive demand indicator.
They awarded the stock a price target of US$174. Amazon shares traded at US$129.55 on Friday afternoon.
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