Prime Paying Off
Amazon’s huge push towards Prime subscription is paying off. The “everything store” announced that it shipped more than a billion products this holiday season with Prime. More people used Prime services this holiday season than ever before. Amazon has more than 50 million prime subscribers in the US, netting the eCommerce giant around $5 billion in subscription fees. But it is not the fees which are the major attraction for Amazon. Prime customers tend to spend much more than non-prime customers.
According to reports, prime customers, on average, spend as much as 2.4X the non-prime customers. Even the quick delivery service, Prime Now, is showing strong growth. According to Slice intelligence, Prime Now accounted for 15% of Amazon’s total shipment during the later part of the holidays compared to 10% last year. The Prime Now service helped Amazon claw back market share from its competitors during the late holiday season when customers wanted quick deliveries. The two-hour delivery service came in handy for many customers.
Amazon Stock Is Facing A Major Technical Resistance
On the back of more than a 3% rally in the stock price yesterday, Amazon stock was able to close above the 50-day SMA for the first time since it gapped down after the surprise Q3 earnings miss. The 50 day SMA had been acting as a resistance line since then and had made a bearish crossover in December. But the stock now faces a major resistance from its 100-day SMA. As you can see from the chart above, the 100-day moving average has been acting as a strong resistance line.
Amazon stock has made multiple attempts to breach the resistance but had been unsuccessful. The multiple failed attempts indicate that the 100-day moving average is offering a strong resistance. The stock is testing the 100-day moving average again. If it is able to breach the resistance line, then the stock could go higher on strong momentum. (Also read: Why Amazon.com Inc’s Disruption Phase Is Over Now).
Amazon Stock Has Huge Upside
According to research firm eMarketer, online sales will continue to grow at double-digit rates (3) till 2020. The research firm expects retail eCommerce sales to more than 2.6 times from $1.9 in 2016 to $4.058 in 2020. The trends during the holiday season indicate that Amazon.com, Inc. (NASDAQ:AMZN) will corner a huge chunk of that growth. The strong growth in eCommerce will act as a major catalyst for Amazon stock. And eCommerce is only one of the areas where Amazon is showing strong performance.
The AWS segment is likely to continue its phenomenal growth this year. Amazon continues to remain a strong growth story. While the stock is currently facing strong technical resistance from the 100-day SMA, it could touch $1000 by year end. The consensus analysts price target for Amazon stock is $924, which represents almost 20% upside from yesterday’s close. Amazon stock continues to remain a good buy.
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The article Amazon.com, Inc Wins Big, But AMZN Stock Is Facing Strong Resistance originally appeared on amigobulls.com. Watch our analysis video on AMZN
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Additional Links:
(1) http://fortune.com/2017/01/05/online-sales-holiday-shopping/
(2) https://intelligence.slice.com/two-extra-shopping-days-make-2016-biggest-holiday-yet/
