Black Friday – how have sales affected stock prices?

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Photo by Tamanna Rumee on Unsplash

Black Friday typically falls the day after Thanksgiving in the US, marking the start of the Christmas shopping season. Usually, stores will offer huge discounts and sales, encouraging consumers to go out – or online – to shop for the latest deals ahead of the festive season.

The term Black Friday was first used in 1996 by police in Philadelphia, to describe the overcrowded shops as Christmas shopping began. The online equivalent, Cyber Monday, kicked off in 2005, and generally takes place on the Monday following Black Friday. Black Friday sales now often span over a few weeks, with Cyber Monday still landing afterwards, meaning that many shoppers aim to get most of their Christmas shopping done during the sales.

Let’s take a look at how this year’s Black Friday sales have affected stock prices, comparing them to the record-high totals of last year.

Consumer spending on Black Friday

Black Friday makes up for almost 20% of total retail sales. In 2021, Black Friday sales reached an incredible $8.9 billion, but this was a decline from 2020’s record-high total of $9 billion.

This dip is believed to have been caused by the global tech industry, which has been hit hard by the COVID-19 pandemic. More specifically the semiconductor shortage has seen a decrease in the supply of some popular technology, such as the new iPhone 13.

In November 2021, a new variant of the virus was discovered. The uncertainty of the Omicron variant had an effect on Black Friday sales, with consumers worrying about what this might mean for the UK economy. With tighter restrictions coming into place, much of the population are being more cautious about their spending, decreasing the traffic to stores.

For traders, this has had a detrimental effect on the stock market, as stocks of the companies reliant on Black Friday sales, have been driven down. On the other hand, shares in the companies that are manufacturing vaccines remain some of the most popular.

How Black Friday has affected stocks

Many investors use Black Friday figures to help them predict the results for the last quarter of the year, which are usually released in the following January. As Black Friday sales this year were poor, the hopes for a profitable quarter aren’t as high, decreasing the demand for a company’s stock and pushing the share price down by default.

Stock trading online allows you to closely monitor the stock market, and with the use of leverage, you can potentially make an even bigger profit on your capital. This can work both ways, however, so to avoid a huge loss, always make sure you thoroughly research the market before you begin trading.

You should also bare in mind that The New York Stock Exchange and Nasdaq are closed all day on Thanksgiving — set to be November 24th next year. The following day (Black Friday) is also a shortened trading day, which could also have an effect on stocks, particularly those with high short interest positions at that time.

Despite the slightly disappointing results of Black Friday, many companies are expecting this period to still be the busiest of the year. Many consumers have already taken to the shops earlier than usual to secure their goods, fearing a shortage due to the looming uncertainty of the ongoing coronavirus pandemic.

The hopes for next year’s Black Friday sales are still high, as the vaccination booster programme is expected to roll out amongst more age groups, with the UK Government hoping to get every person over the age of 18 vaccinated with their third dose of a COVID-19 vaccine. There is also hope of there being a better supply of goods, for the tech sector in particular.