Can Amazon Capitalize On Its Recent Prime Day?

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Includes: AMZN, CVX, HAL, IOC, SLB, XOM
by: TD Ameritrade

Summary

Many analysts say they think Prime Day, AMZN’s take on Black Friday, was a blockbuster for AMZN and Prime members.

XOM said last week that it will drop $2.5 billion to acquire IOC, the natural gas producer.

For CVX, analysts at Thomson Reuters are projecting a 64% decline in per-share profits to $0.32 while its revenues are forecast to retreat 36% to $25.8 billion.

By Kevin Hincks, Sr. Specialist, Trader Education Host, and Swim Lessons host.

As a busy week of earnings season winds down, two energy giants chime in on the state of the sector and the biggest online retailer might shed light on the consumer.

Amazon (NASDAQ:AMZN), the biggest online retailer, might give insight on consumer spending when it reports earnings after the close Thursday. Friday morning, ahead of the opening bell, Chevron (NYSE:CVX) and Exxon (NYSE:XOM), might provide new information on one of the world's most important industries.

Prime Results for AMZN?

So how was Prime Day? That's the information analysts want to know when AMZN reports Q2 earnings. Many analysts say they think Prime Day, AMZN's take on Black Friday, was a blockbuster for AMZN and Prime members. AMZN doesn't break out the numbers, but has reported that the sales rang up some 60% higher than last year. That doesn't include the results of people who signed up for Prime for the deep discounts. Can it help the bottom line?

At Thomson Reuters, analysts are looking for a per-share profit of $1.11 on top-line sales of $29.56 billion.

Short-term options traders have priced in a potential 6% share price move in either direction around the earnings release, according to the Market Maker Move™ indicator on the thinkorswim®platform by TD Ameritrade.

Volumes in options have been light on the put side. Activity on the call side was somewhat active in the 740-, 745- and 750-strikes. The implied volatility is at the 94th percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

Figure 1: Retracing After Recent Highs. AMZN shares notched a new high above $757 in early July and have since pulled back to near former resistance at $725. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

What Can XOM and CVX Reveal About Oil Patch?

Might the worst in the oil patch be over? Oil-service behemoths Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL) indicated as much in recent reports. That might be partly because companies in the oil patch have broadly cut spending, which allows them now to think more strategically about future investments, according to some analysts.

More information is forthcoming when XOM and CVX turn in their reports ahead of the bell Friday. Is more consolidation in the wings for this industry?

XOM said last week that it will drop $2.5 billion to acquire InterOil (NYSE:IOC), the natural gas producer. What are the plans for that?

Analysts reporting to Thomson Reuters are forecasting another sharp decline in per-share profits to $0.64, a 36% drop from year-ago results. Total sales are expected to pull back 12% to $60.6 billion.

Short-term options traders have priced in a potential share-price move of 2% in either direction around the earnings release, according to the Market Maker Move.

Options volume activity looks to be more than double normal at the 90-strike line for puts while calls look lighter at the 95-strike line. The implied volatility is at the 34th percentile.

For CVX, analysts at Thomson Reuters are projecting a 64% decline in per-share profits to $0.32 while its revenues are forecast to retreat 36% to $25.8 billion.

Short-term options traders have priced in a potential share-price move of 2% in either direction around the earnings release, according to the Market Maker Move.

Put options have seen heavy volume at the 100- and 101-strike lines while call options volume, though thinner, has been active at the 104-strike line. The implied volatility is at the 34th percentile.

Figure 2: Rolling Over with Crude Oil. Shares of XOM have pulled back in the last two weeks along with a slide in crude oil prices. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Figure 3: Back into the Range. CVX shares popped higher in late June, but have since pulled back into a trading range between $100 and $105. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor's. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.