Amazon Stock Could Drop 50% Without Strong Prime Day

In the past 52 weeks, Amazon shares have traded as high as $188.65. The current price is near $107. Amazon Prime Day, always a massive spike in revenue for the e-commerce company, is slated for July 12 and 13. If there is any sign of how Amazon’s business is performing, it is Prime Day.

Poor Prime Day results could push Amazon’s shares well below $100, which means they could fall 50% from their 52-week high. While that seems extraordinary, given the company’s earnings strength late last year, it is entirely within the realm of the possible.

Amazon faces two hurdles. The first is competition. Walmart and other large brick-and-mortar retailers have begun to have success online. Amazon, as the market share leader, is the target of every one of these companies.

The other hurdle is the headwinds of a recession. This is a sinking tide that will lower all boats. Amazon, despite its wild success for over two decades, is not immune. Its shares were battered along with most of the market in late 2008 and 2009 in a recession-driven market sell-off.

Amazon’s future is bright, no matter how difficult the current results are. Prime Day could slice more off its share price. However, much of the company’s value (if not most of it) has moved to its Amazon Web Services business, the largest provider of cloud computing services in the world. Even with its market share eroded, it will stay the leader in U.S. e-commerce. Finally, it is worth noting that Amazon has started to downsize its huge delivery infrastructure to save money.

As Amazon goes through this transformation, watch its stock drop by half from its 52-week high.

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