The announcement of a second Prime Day from Amazon (AMZN) sent shares of the e-commerce giant higher Monday. As shareholders for the Club, we’re encouraged by the prospect of Prime’s 150 million global members increasing their online retail spending ahead of the holiday season. The two-day global shopping event, dubbed the Prime Early Access Sale, is exclusively for Prime members and set to take place Oct. 11-12 in 15 countries . It’s a chance for members to get a jumpstart on their holiday shopping with access to thousands of deals for electronics, fashion, homewares and Amazon products, among others. Prime members worldwide bought over 300 million items during Amazon’s last Prime Day, in July. During a time when persistent inflation is weighing on consumers and retailers, advertising budgets are shrinking, and supply chain disruptions persist, Amazon’s sales have proved largely resilient in the face of economic volatility. Analysts at JMP Securities said Amazon’s second Prime Day could help “elongate the holiday spending period.” Consumer buying activity could help “pull forward” sales from the fourth quarter to the current quarter, easing supply chain and shipping disruptions, the analysts argued in a note Monday. Last week, we wrote about how UBS chose Amazon as its top e-commerce pick based on strong sales growth projections. Still, Amazon’s operating income suffered this year due to inflationary pressures, higher fuel costs, excess warehouse space, and a hiring binge. Operating cash flow for Amazon’s fiscal second-quarter fell 40%, to $35.6 billion year-on-year. But over the last quarter, the company has prioritized managing costs in order to protect its profit margins. As a safety measure, Amazon in April added a fuel and inflation surcharge fee of 5% to the existing fees it charges to third-party sellers in the U.S. Last month, the company announced plans to raise fulfillment fees for merchants who sell their products on the site. Amazon is also likely to benefit from a slight easing in inflation and lower fuel prices. In this context, we are buying back some stock previously sold higher. On Monday, the Club purchased 75 shares of Amazon after the S & P 500 Oscillator , our trusted technical indicator, moved further into oversold territory after Friday’s selloff. In early March, we pared back some of our shares after Amazon announced a 20-for-1 stock split and $10 billion buyback . That move was followed by another sale in April after the Federal Reserve took more hawkish steps to fight inflation, with expected negative knock-on effects for Big Tech. In the Club’s portfolio we now hold 750 shares of AMZN. The stock, down about 30% year-to-date, closed up 1.2% at $115.15 a share on Monday. Bottom line We are taking a long-term view on Amazon, Jeff Marks, the Club’s director of portfolio analysis, said Monday during our daily meeting . The long-term investments the e-commerce giant has made in warehouse expansion, along with its move to add surcharges and raise fulfillment fees, could translate into profitability in the next quarter and next year, he added. Marks said the upcoming Prime Day is welcome news because it will “help Amazon get a jump on the holiday season rush, and potentially alleviate some supply chain constraints that tend to happen towards the end of the shopping season.” (Jim Cramer’s Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Amazon signage is displayed outside of an Amazon.com Inc. delivery hub in the late evening of Amazon Prime Day, July 12, 2022 in Culver City, California.
Patrick T. Fallon | AFP | Getty Images
The announcement of a second Prime Day from Amazon (AMZN) sent shares of the e-commerce giant higher Monday. As shareholders for the Club, we’re encouraged by the prospect of Prime’s 150 million global members increasing their online retail spending ahead of the holiday season.