Amazon.com, Inc.'s AMZN Prime subscription service, which was conceptualized with the idea of retaining customer royalty, is slowing and steadily becoming a vital cog in the e-commerce giant's wheels, according to Needham.
The Amazon Analyst: Laura Martin has a Buy rating on Amazon with a $3,700 price target.
The Amazon Takeaways: Data from multiple independent data providers confirm accelerating consumer adoption of stream services, Martin said in a Monday note. (See her track record here.)
Amazon had 150 million Prime members as of January 2020 who are paying $119 per year, a 50% year-over-year increase the analyst said, citing company data.
Martin said she expects subscriber additions to accelerate further due to the COVID-19 pandemic.
About 80% of subscribers pay for Prime primarily for free shipping, and the remaining 20% for media assets such as Prime Video, Twitch, music and reading, the analyst said, citing a Diffusion group survey.
Prime is priced comparably with Netflix Inc's NFLX at $9-$10 per month, she said.
Amazon loses less money than Netflix on its video subscriptions, Martin said.
Amazon Prime is worth about $200 billion, or 12% of the company's total enterprise value, and Prime Video about $40 billion, or 2% of the enterprise value, according to Needham estimates.
Amazon has several hidden multipliers to suggest it is worth between $4,500 and $5,000 per share, Martin said.
AMZN Price Action: Amazon shares were higher by 1.09% at $3,182.41 at the close Monday.
Related Links:
Apple Prepping Subscription Bundles To Boost Recurring Revenue: Report
RBC Lifts Amazon Price Target To Street-High $3,300, Says It's 'Best Global Play' On E-Commerce
Photo courtesy of Amazon.
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