Amazon Wins E-Commerce Market Share With Better Holiday Season Speed, AppLovin Impresses: Analyst

Amazon.com Inc (NASDAQ:AMZN), Applovin Corp (NASDAQ:APP), Chewy, Inc (NYSE:CHWY) and RH (NYSE:RH) each benefitted from Cyber Monday.

What Happened: Adobe Analytics data indicates that Cyber Monday generated $13.3 billion in U.S. Online sales. It enjoyed 7.3% growth — above Adobe’s original estimate of 6.1%. This brought total Cyber Five sales (the period running from Black Friday through Cyber Monday) to $41.1 billion. That’s 8.2% growth versus the original 7% estimate.

Salesforce data indicated less robust 2% growth for Monday and 7% for the week.

Also Read: Amazon And Walmart Dominate Black Friday As Online Sales Soar 14.6%

Bank of America Securities analyst Justin Post reiterated a Buy rating on the e-commerce stocks.

Growth was stronger earlier in the week, with some pull forward in demand likely due to “early discounts being strong enough that many consumers felt comfortable hitting the buy button earlier,” per Adobe.

Discounting during Cyber Week averaged 28%, in line with last year’s, according to Salesforce, with Adobe reporting the deepest discounts in electronics, toys, and apparel.

Reuters highlighted that increased chatbot usage helped customers find discounts, answer queries, and drive a 15% higher conversion rate.

The National Retail Federation reports 124 million customers shopped Online this weekend, down 7.4%, with earlier promotions pulling forward demand.

Post’s top takeaway is that Cyber Five sales were solid, given the potential for pull-forward in demand on more aggressive sales in October and November and a shortened post-Thanksgiving shopping period.

The analyst noted that Amazon is tracking to meet and beat fourth-quarter retail results, though the quarter still depends on December.

Amazon did not provide sales or GMV data per usual but did disclose that the 12-day period ending on Cyber Monday generated “record sales and… items sold”, 60%+ of which were from 3P sellers.

Top categories on Amazon included electronics (Echo Dots & Fire TV Sticks were the best-selling products), toys, and beauty.

While discounting was likely comparable to last year based on Salesforce data, Amazon reported that customers saved “billions” and extended deals through Christmas Eve, suggesting consumers are responding to promotions.

Amazon highlighted data from analytics firm Profitero that indicated Amazon’s prices averaged 14% lower than peers and 5% lower than Walmart Inc (NYSE:WMT), possibly driving share for Amazon.

Discounting is always a risk to fourth-quarter margins, but Post noted that a higher 3P mix, delivery speed efficiencies, cost savings from package consolidation, and headcount efficiencies should support margins.

Why It Matters: Cyber Five data suggests consumers are responding positively to Online sales events. Two key questions for the fourth quarter are whether margins are being impacted and whether December volumes see some pressure given the potential pull-forward.

Key themes this year included less concentrated demand, which could increase efficiencies. Consumers and retailers are embracing AI, which could help drive incremental volumes at better margins and shift back to Online after in-store gains in the last two years.

Post reiterated his top eCommerce stocks this holiday. The analyst finds Amazon (price target of $230) positioned to capture share in a shortened holiday window given better delivery speeds, RH (price target of $384) for accelerating sales and housing play, and Chewy (price target of $40) for a multi-quarter estimate revision cycle. He also noted that AppLovin (price target of $375) is well positioned given growing eCommerce exposure.

Price Actions: Amazon stock is up 1.93% at $217.56 at last check Wednesday. Applovin is up 2.11%, Chewy is down 2.94% and RH is down 1.04%.

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