Needham's Martin Praises Amazon's Twitch Business, Talks Lesser-Known Revenue

Shares of Amazon.com, Inc. AMZN could double in value over the long-term as the company continues to focus on growing services revenue, Needham analyst Laura Martin said on CNBC's "Worldwide Exchange."

Media Power: Investors tend to mischaracterize Amazon as an e-commerce company, but it is in fact a services-focused company, the analyst said.

The company's media assets and AWS business are each valued at $500 billion, and this implies the remaining $300 billion of the stock's valuation is attributed to the retail business at a cheap multiple of one times earnings, she said. 

Amazon's media business is also misunderstood by investors, as Twitch, along with its streaming video and music businesses targets, 15-to-25-year-olds, Martin said.

This is the ideal demographic for Amazon, as they are the "next generation of e-commerce buyers," the analyst said. 

Bezos The Biggest Risk: Amazon founder and CEO Jeff Bezos is 56 and is considered one of the greatest entrepreneurs of our generation, Martin said.

But at some point, he will retire, and the analyst said this represents the biggest risk to the company.

Amazon has a deep roster of talented executives who share a culture of "creating value," she said.

Martin said it is difficult — if not impossible — to quantify the risk of Bezos stepping down.

Hidden Growth: Amazon generates an estimated $60 billion a year in free cash flow and re-invests half the amount in its business, Martin said.

Some of the investments are obvious and well-known, like in its Whole Foods grocery business.

But there is a part of the $30 billion in investments allocated toward "non-visible growth," such as logistics, she said.

Amazon shares were up 0.26% at $2,647.87 at the time of publication. 

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