What's going on?
On Wednesday, Amazon announced that Santa Claus had really gone to town: the ecommerce giant sold more items than ever before this holiday season (tweet this).
What does this mean?
More people all over the world signed up for Amazon’s Prime service. As well as offering fast and free delivery appealing to the less industrious shopper, Prime’s ever-expanding video and music streaming catalogs are a low-effort means of setting the mood for the season (more Mariah, anyone?).
Amazon hasn’t said exactly how much revenue it generated from that record number of items – investors have to wait until early February for financial details. They’ll do so with bated breath, since there’s no guarantee selling more stuff translates into more revenue. Aggressive price cutting since Black Friday has hurt retailers the world over – including fellow online darling ASOS.
Why should I care?
For markets: It could be a Christmas miracle…
Amazon’s stock rose 9% on Wednesday – with investors betting that the company’s announcement means it’ll exceed its own lackluster earnings forecast for this quarter. That doesn’t just benefit big investment funds: Amazon’s one of the most widely owned stocks among non-professional investors. Shares of Amazon’s latest rivals, logistics companies FedEx and UPS, also got a boost thanks to the likelihood of higher income from more shipping fees. And the suggestion that consumer spending was still buoyant despite higher interest rates may have led investors to buy up stocks overall – giving the market its best single day since 2009.
The bigger picture: … But the jury’s still out.
Wednesday’s optimism was short lived: markets fell on Thursday, continuing their downward December. For some investors, the future’s still bleak. A date in the diary for further US-China trade negotiations doesn’t guarantee a resolution to the ongoing trade war – and with the holidays over, consumer spending might yet slow, thanks to higher interest rates making borrowing more expensive. And don’t forget the US government’s partially shut down, costing the country’s economy $1.2 billion a week.