Amazon to Feel Q4 Strain but Still Likely to Set Records
Holiday demand is likely to tax Amazon’s fulfillment, Wedbush analyst Michael Pachter wrote investors Monday. “We expect to see signs of strain, with some third parties likely to shift warehousing during the holidays to other online vendors,” said Pachter, calling it a “high class problem” with overall online holiday demand expected to "set records.” Amazon’s Holiday Dash deals began Oct. 16, earlier than 2019, when sales didn’t begin until its Black Friday deals week Nov. 22-29. Earlier holiday sales, the Prime Day shift to October, and likely share shift toward e-commerce spend from brick-and-mortar locations this year “all position Amazon to perform exceedingly well over the holiday period." Wedbush expects Amazon’s Q3 revenue to be at or above the high end of guidance -- $87 billion to $93 billion -- when the company reports earnings after U.S. market close Thursday. “Substantial revenue upside is likely,” said the analyst: Wedbush estimates 2020 Prime Day sales of roughly $6.1 billion, some 25% growth over its 2019 estimate of about $4.9 billion. In Q4, Amazon will "likely leave ample room to beat" despite another "record Prime Day and expected share gains for ecommerce over the holidays.” Amazon Web Services, Fulfillment by Amazon and ads should drive margin expansion, with Prime memberships driving overall retail revenue growth, Pachter said.