As you may recall, Amazon (AMZN) held their Prime Day event just over a month ago on October 13 and 14. The event usually takes place in July but due to overwhelming demand during the pandemic, the company pushed the event to October. Expectations for this year’s event were high with revenue estimates of $9.91 billion worldwide.
Well, the numbers are in and the company crushed estimates – making this year’s Amazon Prime Day the most successful ever recorded. Sales for Prime Day 2020 hit $10.4 billion, up 45.2% from the $7.16 billion in 2019, and up 148.2% from the $4.19 billion in 2018.
It’s clear to see why Amazon shoppers are so enthusiastic about the day – Prime members saved over $1.4 billion during the event!
While these numbers may seem impressive, two companies on my Accelerated Profits Buy List held their version of Prime Day this week. The Chinese e-commerce companies Alibaba Group Holding Ltd. (BABA) and JD.com, Inc. (JD) held their Singles Day event on Wednesday.
They call this event Singles Day in opposition to Valentine’s Day to celebrate single people. It is held on November 11 every year due to the date’s four single digits. Both of the companies Singles Day events earned a whopping $115 billion in sales! This crushed previous records – making this the most successful Singles Day ever recorded.
Alibaba’s Singles Day promotions were extended this year from November 1 through November 11, making the company’s total sales of $74.1 billion in a week and a half. This crushed last year’s total of around $40.6 billion. JD.com raked in around $40.97 billion during the same period, crushing 2019’s Singles Day revenue of $30.9 billion.
So, what does all of this mean for the stocks?
Interestingly, Wall Street yawned at Amazon’s Prime Day with the stock trading lower since mid-October. The fact is many other American companies are becoming competition for Amazon during Prime Days. With companies like Target (TGT), Walmart (WMT) and Costco (COST) also offering similar deals during the same period – it is hard for investors to get excited about Amazon’s Prime Day sales.
As far as the Chinese e-commerce companies go, the stocks dropped slightly lower on Wednesday due to news of Chinese regulators’ antitrust rules that could affect both companies. But the stocks appear to be rebounding nicely now and I expect that pattern to continue.
All three companies, AMZN, BABA, and JD are A-rated in my Portfolio Grader, making all of them Strong Buys. But, let’s take a closer look at the numbers to see how the companies stack up.
Amazon released revenue and earnings results for the third quarter on October 29. Amazon achieved total third-quarter revenue of $96.15 billion or a 39.3% year over year increase. This topped analysts’ estimates for $92.7 billion. Amazon also achieved third-quarter earnings of $12.37 per share, beating analysts’ forecasts of $7.41 by 66.9%.
While AMZN is up about 70% year to date, some of its strength is due to its heavy weighting in the SPDR S&P 500 (SPY) and NASDAQ 100 (QQQ). Currently, it holds a 4.39% weighting in the SPY and a 10.18% weighting in the QQQ. So, every time someone buys an index, they’re building a foundation for tech stocks. That is why it has been so stable.
For the most recent quarter, Alibaba reported total revenue of $22.84 billion, or 30% annual revenue growth, and earnings of $6.94 billion, or 44% annual earnings growth. Second-quarter earnings per ADS increased 37% year-over-year to $2.65. The consensus estimate called for earnings of $2.11 per share on $23.17 billion in revenue, so BABA posted a 25.6% earnings surprise and a slight revenue miss.
Annual active consumers on Alibaba’s sites climbed to 757 million and mobile monthly users rose to 881 million, as the company’s “domestic core commerce business continues to grow steadily” in the wake of the pandemic in China.
JD.com, Inc. is scheduled to release results for its third quarter before the stock market opens on November 16. Analysts are looking for earnings to jump 37.9% year-over-year to $0.40 per share, up from $0.29 per share in the third quarter of 2019. Earnings estimates have also been revised higher in the past three months, which bodes well for another quarterly earnings surprise. Third-quarter revenue is forecast to increase 33.6% year-over-year to $25.74 billion.
At Accelerated Profits, where I update subscribers every Monday, my latest Weekly Profit Guide identified seven particularly Strong Buys on our buy list. My Accelerated Profits stocks continue to have wave-after-wave of positive earnings and sales, as well as exceeded analysts’ expectations.
In fact, of the 37 Buy List companies that have announced results so far, 34 have crushed earnings estimates by an average 40%. Clearly, it’s been a phenomenal earnings season for our Accelerated Profits companies, and it’s not over yet.
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Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Alibaba Group Holding Ltd. (BABA), JD.com, Inc (JD), Amazon (AMZN)