Why Amazon Could Have a Bigger Holiday Season Than Anyone ExpectedBy twocents@thestreet (Chris Ciaccia) NEW YORK (TheStreet) -- Amazons stock has had a rough go of it since the company said fourth-quarter results would be weaker than expected. Recent events suggest, however, that the company not only will come in ahead of its own estimates butBy twocents@thestreet (Chris Ciaccia) NEW YORK (TheStreet) -- Amazons stock has had a rough go of it since the company said fourth-quarter results would be weaker than expected. Recent events suggest, however, that the company not only will come in ahead of its own estimates but is taking market share from eBay , other online sites and perhaps all of retail. Pacific Crest Securities analyst Chad Bartley, who rates Amazon outperform with a 12-month price target of $435, believes that Amazon is well positioned to benefit from the surge in online shopping in a number of ways, from traditional buying of clothes and goods, to items like video games. Must Read: Amazons Tablet Strategy Appears to Pay Off as Kindle, Fire Sales Jump We believe Amazon is in a strong position to benefit from the healthy e-commerce spending this holiday and to gain share relative to its online and offline peers. 81% of respondents plan to shop on Amazon this holiday compared to 30% for eBay, Bartley wrote in the note. Also, 33% plan to do most or all of their holiday online shopping at Amazon, compared to 4% for eBay. In October, Amazon said it expects fourth-quarter sales to be between $27.3 billion and $30.3 billion, below the average analyst estimate of $29.75 billion, according to Thomson Reuters. Amazon also expects to post a wide range of operating results next quarter, between a loss of $570 million and a gain of $430 million, including $470 million in stock-based compensation. Online shopping is expected to be robust this year, with comScore predicting consumers will spend more than $61 billion, up 16% year over year. As Amazon continues to build out its mobile strategy, launching new apps and devices, such as the Kindle Fire HDX 8.9, the company may benefit even further. ComScore expects mobile shopping to grow 25% over last years levels, accounting for 13% of total online holiday spending this year, its highest percentage ever. During the calendar fourth quarter, mobile spending is expected to surpass $10 billion for the first time ever. Must Read: Alibabas Opportunities May Spell Trouble for eBay and Amazon In a survey, Bartley found 81% of respondents said they would shop on Amazon, as opposed to just 30% for eBay. Perhaps more surprisingly, 33% of respondents said they would do all their online shopping at Amazon, compared with just 4% for eBay, with Amazon Prime being a major factor. Amazon Prime is Amazons $99 a year service that provides two-day shipping along with movie, TV show and music streaming service akin to Netflix and Pandora . Bartley suggested that Amazons Prime members are surging in the fourth quarter, as the company continues to build the moat around the membership. The analyst found that 43% of those surveyed were Prime members, up from 35% in the third quarter, and 26% in the fourth quarter of 2013. Amazon recently announced it was getting into the private label business with Amazon Elements, a new line of premium, everyday items available only to Amazon Prime members as the company seeks to capture even more of consumers dollars. Bartley also said that while Target and Wal-Mart have been aggressive this season with pricing and shipping promotions, this wont affect Amazon. For example, 87% indicated Targets free-shipping promotion has not affected their holiday shopping, while 85% indicated the same for Walmarts price-matching policy, Bartley penned in the note. This, combined with our holiday product availability and pricing data, suggests Amazon is competing effectively. Even though Amazons prowess this holiday season seems to be taking market share away from online shopping, the company is working hard to capture mindshare and market share from all retailers. With Sonys PlayStation 4 and Microsofts XBox One released in 2013, new games have been some of the bigger sellers this holiday season, even with Bartleys survey finding that 91.5% of respondents are not going to buy a console. 29% of those in the survey said they would rather buy a game from Amazon, as opposed to 20% for GameStop and 16% for both Wal-Mart and Target. Must Read: Why Jeff Bezos Wants You to Be Patient With the Fire Phone -- Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia // 0;if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=//platform.twitter/widgets.js;fjs.parentNode.insertBefore(js,fjs);}}(document,script,twitter-wjs); // ]]> Click to view a price quote on AMZN. Click to research the Retail industry. ift.tt/1gB4pon
Posted on: Tue, 09 Dec 2014 17:15:29 +0000
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