How does Black Friday impact the stock market?

In this article we look at:

What is Black Friday?

Black Friday is a popular sales event that takes place every year on the Friday after Thanksgiving. While based on a North American holiday, Black Friday sales have become popular in many parts of the world, including Australia. 

When will Black Friday 2022 take place?

This year’s Black Friday sales event is set to take place on Friday, November 25, 2022. 

Key Black Friday statistics

Black Friday has grown in scale and significance in the last decade, in 2021 US consumers spent close to US$9 billion during the sales event.

With that in mind, here are some key Black Friday statistics you should keep in mind as we head towards this year’s sales mega event: 

  • In total, US consumers spent US$8.9 billion during Black Friday 2021, down from total spend from the year prior
  • The average spend per person actually increased about 5% year-on-year in 2021, with the average adult spending US$430 during the sales event
  • Amazon was a significant benefactor of that spend, with 17.7% of total Black Friday sales booked through the e-commerce giant.

While Australians spend slightly less than their North American counterparts, recent research from Finder sheds significant light on the habits of local shoppers. Here are the stats to keep in mind:

  • Overall, 6.8 million Australians are set to participate in 2022’s Black Friday sales event 
  • Australian consumers are forecast to spend A$3.8 billion at the upcoming Black Friday 2022 sales event 
  • Aussies are expected to spend on average A$394 per person at the upcoming event. 

How Black Friday impacts the stock market 

To understand how Black Friday could impact the stock market, it’s important to understand what investors are currently paying attention to. 

Currently, investors are focused on four key things: (1) inflation, (2) interest rates, (3) geopolitical uncertainty, and (4) corporate earnings. 

This is not to say that investors won’t pay attention to Black Friday or that Black Friday sales won’t impact the stock market, but that the focus will be on how the sales event fits into the four key things above. 

Here’s what we mean by that.

Inflation & earnings spotlight

Take inflation for example. With inflation at multi-decade highs, we’re seeing cost of living pressures across the world increase. There’s a chance those pressures could translate into lower spend this Black Friday.

In periods of high inflation people tend to prioritise buying essentials (non discretionary items) opposed to things like TVs, small appliances, and clothes (discretionary items which are popular at events like Black Friday). 

Here’s some stats to support that. Across the entire 2021 sales weekend, including Black Friday and Cyber Monday, 30% of people surveyed by market research firm Numerator, said they spent less than in 2020, as a result of having ‘less disposable income due to rising prices on everyday goods’.

Elsewhere, with Black Friday sales landing in the fourth quarter of the year – historically a strong revenue period for companies with retail operations – it’s telling that companies like Amazon have already lowered their Q4 sales guidance.

Does this suggest that big retail companies are expecting lower sales in 2022?

On the flip side, in the past analysts from investment banks have characterised Black Friday sales as a positive short-term catalyst for stocks in sectors such as retail or e-commerce.

TLDR: The keyword there however is short-term. Ultimately, it is unlikely that Black Friday sales will have a material impact on a company’s share price, or the stock market more broadly, over the long-term. 

3 ‘Black Friday stocks’ to watch

Below we highlight three stocks that tend to benefit from events like Black Friday, even if just in the short-term. 

Amazon (AMZN)

The e-commerce giant is one of the biggest benefactors of Black Friday, with close to 17.7% of total US consumer spend happening on the platform in 2021. 

In 2021 Amazon’s total GMV – or gross merchandise volume – which represents total value of goods sold on the platform, reached US$600 billion. That figure itself was made up of US$210 billion in first-party Amazon sales, and US$390 billion in sales from third party merchants on the Amazon platform. 

Ebay (EBAY) 

Like Amazon, Ebay has a history of leveraging Black Friday sales to drive an increase in the total value of goods sold on its platform.

In 2021 Ebay’s total GMV stood at US$87.37 billion, highlighting that while the company is large, it still pales in comparison to the likes of Amazon. 

Despite being smaller, Black Friday sales can be expected to help Ebay generate higher GMV than it otherwise would on an average day or week, with the fourth quarter being considered a seasonally strong period for retail companies. 

Block (SQ)                                                                     

Block – parent of buy now pay later juggernaut Afterpay – has also historically been a benefactor of Black Friday and other similar sales events. 

While Afterpay doesn’t directly sell items during these sales events – companies like Afterpay can directly benefit from Black Friday sales based on increased customer usage and as a result potentially drive underlying sales higher in the period.

The current high inflation environment might also benefit BNPL companies more broadly. 

As Associate Professor Rob Nicholls (UNSW) recently put it: ‘As inflation rises and interest rates go up in the wake of the pandemic, BNPL looks more attractive as there is no interest fee to pay.’

How to buy and invest – before and after Black Friday 

Whether you’ve just started your investing journey or just want to start doing money better, with Syfe you can invest in over 10,000+ US stocks & ETFs – including the 3 ‘Black Friday’ stocks discussed above – all from the palm of your hand. 

To start investing in US shares like Amazon, eBay, and Block with Syfe, follow these simple steps:

  • Download the Syfe app & create an account or login to Syfe app on your mobile device
  • Search for the stock you’re looking to invest in 
  • Tap ‘buy’ on the app screen
  • Choose between ‘buy in dollars’, ‘but in shares’ or ‘Limit order’ then just slide to buy
  • Confirm your order and monitor your stock investment

This article/webinar is brought to you by Syfe Australia Pty Ltd., CAR number 1295306 of Sanlam Private Wealth Pty Ltd (AFSL 337927). Disclaimer: Investing involves risk including the risk of losing your invested amount. We do not provide personalised advice or recommendations.  Any information we provide is general advice and current at the time  written. Please speak to your Financial or Tax adviser for personal advice. Any reference to an investment’s past or potential performance is not an indication of any specific outcome or profit.