Amazon.com Inc. (AMZN) is proving its strategic foresight once again. For the second consecutive year, the e-commerce giant has prioritized Black Friday over Cyber Monday, a bold move that’s paying significant dividends, according to Deepwater Asset Management’s Gene Munster. This calculated shift underscores Amazon’s growing prowess in crafting its own sales events, a strategy successfully employed with Prime Day and its recent NFL Black Friday game partnership. The results speak for themselves: a marked increase in sales and a notable rise in the company’s stock price.
Munster highlights the potential impact of impending tariff changes, particularly concerning import duties on products exceeding $800. While this poses a potential risk, Amazon’s proactive approach to its sales calendar and its success in cultivating its own shopping holidays appear to be mitigating this threat. This self-generated momentum is evident in the company’s improved retail profitability. While precise figures remain undisclosed, Munster estimates an impressive turnaround from a negative 3% operating margin two years ago to a positive 5% in the most recent quarter. He projects further growth to 7% by 2025, a projection that could significantly boost earnings per share to $7.15, surpassing current analyst expectations of $6.15.
This enhanced profitability could catapult Amazon’s stock valuation to levels comparable to tech giants like Microsoft, Apple, and NVIDIA. The company’s strategic move to capitalize on Black Friday is occurring within a fiercely competitive retail environment. Retailers across the US and Europe are aggressively vying for consumers’ attention with early and extensive sales promotions. Stores opened as early as 5 am following Thanksgiving, highlighting the intensity of the shortened shopping season. This strategic timing is crucial, as consumers are increasingly making purchases earlier in the season due to ongoing discounts.
The potential impact of proposed tariffs, particularly those speculated under a potential new administration, adds another layer of complexity to the market. Analysts caution that these tariffs, intended to address trade imbalances, might inadvertently strengthen the dollar, creating economic challenges for both consumers and businesses. Despite these potential obstacles, the Black Friday to Cyber Monday period is poised to smash sales records, with US retail sales projected to reach a staggering $75 billion, representing a robust 5% year-over-year growth, according to Bain & Company. This underlines the immense importance of this shopping period for retailers.
Amazon’s stock closed at $207.89 on Friday, a 1.05% increase, reflecting the market’s positive response to the company’s success. Year-to-date, Amazon shares have surged nearly 39%, according to Benzinga Pro data. The consensus analyst rating for Amazon stock is currently a “Buy,” with price targets ranging from a low of $197 to a high of $285, and a consensus target of $238.16 – suggesting a potential upside of 14.6%. Amazon’s successful navigation of the holiday shopping season, particularly its bold Black Friday strategy, is not just a testament to its operational efficiency but a clear indication of its enduring strength in the competitive landscape of e-commerce.
