Amazon E-Commerce Is A 'Loss-Leader' … Its Real Money Is In 'Services,' Says Analyst
Portfolio Pulse from Michael Juliano
An analyst from Needham suggests that Amazon's share price is driven more by its services like Advertising, Cloud, and Prime Video rather than its e-commerce business, which is used as a loss-leader. Amazon's services revenue has been higher than its product sales for the past 11 quarters, indicating a shift towards high-margin businesses.
September 12, 2024 | 4:47 pm
News sentiment analysis
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NEUTRAL IMPACT
ProShares Long Online/Short Stores ETF, which holds Amazon, slipped slightly, possibly due to broader market trends despite positive sentiment towards Amazon's services.
CLIX holds Amazon, and its slight slip may be due to broader market trends rather than Amazon-specific news, as the sentiment towards Amazon's services remains positive.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 50
POSITIVE IMPACT
Needham analyst views Amazon as a services company, with services revenue outpacing e-commerce. This suggests a strategic focus on high-margin services like Advertising and Cloud, which could positively impact AMZN's stock price.
The analyst's note highlights a strategic shift towards high-margin services, which are driving Amazon's revenue growth. This aligns with investor interests in profitability and could lead to a positive short-term impact on AMZN's stock price.
CONFIDENCE 95
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Fidelity MSCI Consumer Discretionary Index ETF, which includes Amazon, rose slightly, indicating positive market sentiment towards Amazon's service-driven growth.
FDIS includes Amazon, and the ETF's rise suggests that investors are optimistic about Amazon's focus on high-margin services, which could enhance profitability.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
ProShares Online Retail ETF, which holds Amazon, saw a slight increase, reflecting the positive sentiment around Amazon's strategic focus on services.
ONLN holds Amazon, and the positive outlook on Amazon's services could contribute to the ETF's slight increase, reflecting investor confidence in Amazon's growth strategy.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Vanguard Consumer Discretionary ETF, which holds Amazon, gained slightly, reflecting investor optimism about Amazon's shift towards high-margin services.
VCR holds Amazon, and the ETF's gain indicates that investors are positive about Amazon's strategic focus on services, which could drive future growth.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Consumer Discretionary Select Sector SPDR Fund, which includes Amazon, edged up, showing positive sentiment towards Amazon's service-oriented growth.
XLY includes Amazon, and the ETF's slight increase suggests that investors are optimistic about Amazon's focus on high-margin services, which could enhance profitability.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 50