2024-02-05 18:58:27 ET
Summary
- Amazon Prime Video is gaining momentum in the streaming wars, with recent earnings beating expectations.
- The streaming industry is becoming more competitive, with companies focusing on monetization and increasing average revenue per user.
- Amazon's content spend is increasing, positioning it as a strong contender in the streaming market.
On Tuesday, January 23rd, Netflix (NFLX) released its fourth-quarter earnings beating on the top line with revenues up 12.5% year over year to $8.3B in the quarter. While EPS missed estimates by $.11 coming in at $2.11 (largely due to an unrealized $239M F/X non-cash expense on the company's Euro-denominated debt), the company raised its first-quarter EPS guidance to $4.49 (from $4.14) and shares were up more than 3% on the day ... while I believe that their earnings were impressive with the company adding 13.12M subscribers quarter (bringing its total to 260.28M), I am not writing about Netflix. I am discussing the future of the streaming industry.
After the bell the following week, on February 1st, Amazon (AMZN) shares were up over 7% after hours as the company's fourth-quarter earnings exceeded analyst expectations. Amazon delivered $170B in revenue for the quarter (13.9% year/year growth) and achieved $1.00 in earnings per share (EPS), crushing analysts' $.80 consensus estimate by 25%! This is a significant achievement, especially when considering the fact that Amazon missed EPS estimates of $.17 per share and delivered just $.03 a year ago in Q4 2022. There's a lot of good news for investors to digest. I remain optimistic that Amazon is uniquely positioned to continue growing its Prime membership base while also expanding its margins, making it an attractive investment in the long run. I see synergies for Amazon's diversified business units and believe that they are beginning to come together - a very good thing for profitability and investors.
I originally wrote this article before earnings solely about Prime Video... but, at the suggestion of the editorial staff, I've waited for results to be released - and I'm happy that I did! Management's commentary throughout Q4 supports my thesis - and there is now more evidence of the potential of Prime Video. On management's Q4 conference call with investors, there were several comments made about the service and Amazon in general that I want to highlight - I apologize for the many quotes, but I believe it's always good to hear directly from the source! The timing of this article could not be much better as Amazon has just started showing ads on Prime Video this past week on January 29th . This move doesn't stray far from Amazon's current business model - Amazon generated a staggering $14.6B in advertisement revenue during the quarter (Q4) - before ads were even launched on Prime Video. Amazon has already captured the third spot in terms of ad revenue worldwide, finding itself behind only Google and Meta . ...
Read the full article on Seeking Alpha
For further details see:
Amazon: Gaining Momentum In The Streaming Wars