Photographer: David Paul Morris/Bloomberg

Amazon Investors Emboldened by 3 Million New Prime Members

  • Holiday bump in memberships signals growth continues
  • Seattle-based e-tailer's shares more than doubled in 2015

Amazon.com Inc. shareholders are cheering the company’s big push to accommodate last-minute holiday orders and a coinciding shift of consumer spending from brick-and-mortar stores to websites and smartphone applications.

The company’s shares have more than doubled this year and are closing in on $700, with some analysts raising their price targets to $800 and higher. Investor enthusiasm suggests a strong fourth quarter will endure into 2016, enabling Amazon to continue to gobble up market share even as rivals such as Wal-Mart Stores Inc. and Target Corp. expand their online delivery options.

“It’s been the year of Amazon for the last few years and they seem pretty unstoppable at the moment,” said Sucharita Mulpuru, an analyst at Forrester Research, who predicted total online sales would climb 11 percent in November and December to $95.5 billion.

Amazon added 3 million Prime members in the third week of December, the company announced Monday, signaling its $99 annual subscription for delivery discounts as well as video and music streaming continues to draw shoppers as spending shifts online.

Amazon’s post-Christmas announcement highlighted demand from last-minute shoppers, including a Prime Now order delivered at 11:59 p.m. Christmas Eve in San Antonio. Amazon expanded its same-day delivery service -- Prime Now -- to big cities around the U.S. this year, and Christmas Eve was the program’s busiest day, Amazon said.

Independent data sources such as ChannelAdvisor Corp., which helps 2,900 merchants sell goods on Amazon and other marketplaces, and ComScore Inc., which tracks web traffic, reinforced that Amazon had a strong fourth-quarter sales, said Victor Anthony, an analyst with Axiom Capital Management in New York City, who set a target price for Amazon shares at $797.

More Packages

Anthony surveyed almost 20 UPS drivers in the Northeast who reported a considerable up-tick in the number of packages coming from Amazon this year, he said.

“Amazon is just running away with it in the fourth quarter,” Anthony said.

The Seattle-based e-commerce giant is finishing the year with 50 million Prime members worldwide, including 30 million in the U.S., estimated Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles. Prime subscribers spend more money with Amazon than non-members, so the membership growth is a promising sign for future sales, he said.

“The shift of retail sales from brick-and-mortar to online is clearly accelerating, suggesting we see even more of a shift to online retail in 2016,” Pachter said.

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