The company doing it all and doing it well, just can’t stop winning. Amazon.com Inc. (AMZN) continues to expand its profitability in multiple sectors, including e-commerce and its Amazon Web Services cloud computing products, as well as on its streaming media platform, Prime Video. This media service has recently made massive investments to expand its content library, and seems to be expanding so fast that its hidden value as an empire can be overlooked. (See AMZN stock analysis on TipRanks)
In her May 27th report, Laura Martin from Needham & Company details several highly profitable and expansionary moves that Amazon has made as of late. All pertain to its media platforms Prime Video and Twitch.
Martin notes three recent 2021 Prime Video investments. Namely, Amazon has reached a deal with the NFL to host Thursday night football games for the next 11 years, totaling $11 billion. It has also completed a $465 million purchase of exclusive rights to create Lord of the Rings content, as well as a high-profile $8.45 billion acquisition of MGM studios. The company spent all this cash just to boost Prime Video to compete with Netflix Inc. (NFLX) in the increasingly dramatic streaming wars.
Martin published a Buy rating and assigned a 12-month price target of $4,150, representing a potential upside of 28.76%. On TipRanks, Laura Martin holds a five-star rating, and is ranked as #132 out of a total of 7,535 analysts.
Calculated by TipRanks, the average analyst price target is $4,295.17, reflecting a potential upside of 33.26%.
Martin asserts that Amazon is to be viewed far beyond the typical lens of an e-commerce or even a cloud computing company, stating that its portfolio of media assets amount to around $920 billion, equating to 53% of Amazon’s enterprise value.
She adds that Amazon Prime Video is not just a profitable enterprise, but complements the e-commerce side of the company by pulling in consumers to its ecosystem and “elongating engagement and time spent with AMZN brands.” Additionally, she states that Prime Video has a better business model than Netflix and does not permit as much password sharing. Prime Video’s subscription costs are much lower than Netflix’s, and it has almost four times as many movies as Netflix available in its content library.
Furthermore, Martin argues that the video-game aggregation and streaming service Twitch, which is a subsidiary, is the “most underrated” media asset in Amazon’s holdings. Twitch saw increased consumer engagement due to the COVID-19 lockdowns, and currently dominates the live video game viewing industry.
Martin anticipates that Twitch will generate 20% more revenue year-over-year from 2020. Twitch also ties game developers into Amazon’s ecosystem by bundling with Amazon Web Services’s servers in order to host gaming streams. Martin admits that Twitch is only about 1% of Amazon’s enterprise value, but has massive potential to seize the industry as it continues to grow.
Through recent acquisitions and investments, Amazon’s media empire has made it clear that it has no intention of slowing down for years to come.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
