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Why Amazon Is Jumping Higher Today

By Rich Duprey – Sep 22, 2020 at 3:46PM

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The e-commerce giant is benefiting from a confluence of good news.

What happened

Shares of Amazon.com (AMZN -1.58%) were rising almost 5% in afternoon trading Tuesday following an analyst upgrade on the stock after its recent pullback and rumors that its annual Prime Day sales event was imminent.

So what

Amazon, along with other numerous tech stocks, exhibited significant weakness in recent days, which helped cause the market indexes to fall sharply from their highs. Yet Bernstein analyst Mark Shmulik said Amazon's "dominant share position" will only become more prominent as the retail sector normalizes. Because of the strategic gains the e-commerce giant has made in grocery and shopping, the pullback in its stock creates an "attractive entry point."

Rising arrows on stock chart

Image source: Getty Images.

Also, The Verge reports Prime Day will kick off on Oct. 13. The annual shopping extravaganza was postponed from its usual July date because of the COVID-19 pandemic, and consumers have anticipated its return as we're getting closer to the start of the Christmas shopping season. 

Many retailers are planning to start their own holiday sales events early this year to make up for the five months of revenue lost to the coronavirus outbreak.

Now what

Amazon's stock had peaked at over $3,550 per share at the start of the month but had fallen to $2,960 at yesterday's close. The low price and the coming boost to sales are sending shares higher.

The retailer also entered the connected-fitness market today with the launch of Prime Bike, a low-cost stationary bike from Echelon.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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