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Amazon (AMZN) Boosts Prime Momentum With Grubhub Partnership

Amazon’s AMZN shares have gained 17.4% on a year-to-date basis, outperforming the Zacks Internet Commerce industry’s growth of 11.7%.

The company is riding on its dominant position in the e-commerce market backed by its robust distribution strength, expanding fulfillment network, strengthening relationship with third-party sellers and most importantly Prime momentum.

Amazon is continuously making efforts to bolster its Prime program in order to sustain its strong position in the retail sector as well as in the online streaming space.

This is evident from its latest partnership with Grubhub. Per the terms, the e-commerce giant has included Grubhub+ as an ongoing Prime membership offer.

Prime members in the United States can now avail Grubhub+ membership, which costs $120 a year, for free. They can place food orders from various restaurants across 50 states in the country with Grubhub directly on Amazon.com and in the Amazon Shopping app.

The underlined partnership also makes Prime customers eligible for zero delivery fees on orders over $12, lower service fees, and 5% credit back on pick-up orders.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Prime: Key Catalyst

The Grubhub perk is expected to boost Prime adoption.

The Prime program remains a key catalyst for Amazon’s top-line growth, backed by customer-friendly offers and cashback benefits. Its strengthening delivery and shipment services, expanding music and video content and robust loyalty system are constantly boosting Amazon’s Prime subscriber base.

With Prime, customers enjoy access to unlimited grocery delivery on orders above $35 from Whole Foods Market, Amazon Fresh, and other local grocery and specialty retailers.

Prime also offers fast and free shipping of prescription medicines from Amazon Pharmacy.

Prime members can stream ad-free 100 million songs and millions of podcast episodes with Amazon Music. They also enjoy access to free games, a free Twitch channel subscription, and more gaming benefits with Prime Gaming.

We believe that the growing momentum of Prime will drive the company’s subscription revenues.

Amazon witnessed 11% growth in its subscription services sales, which were $10.72 billion in first-quarter 2024.

Growing momentum across subscription services is expected to drive the company’s overall financial performance.

The Zacks Consensus Estimate for 2024 revenues is pegged at $638.24 billion, indicating year-over-year growth of 11%. The same for 2024 earnings stands at $4.58 per share, implying year-over-year growth of 57.9%. The EPS estimate has moved north by 1.1% over the past 30 days.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the retail-wholesale sector are The Gap GPS, Coupang CPNG and Walmart WMT. While The GAP sports a Zacks Rank #1 (Strong Buy), Coupang and Walmart carry a Zacks Rank #2 (Buy) each, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Gap has gained 40.8% in the year-to-date period. GPS's long-term earnings growth rate is pegged at 3.4%.

Coupang shares have gained 39.2% in the year-to-date period. CPNG’s long-term earnings growth rate is currently projected at 1.6%.

Walmart has gained 26.1% on a year-to-date basis. The long-term earnings growth rate for WMT stock is currently projected at 7.15%.

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