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Some Insight Into Amazon's Global Prime Subscribers

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Some Insight Into Amazon's Global Prime Subscribers

John Blackledge of Cowen estimates average global paid Prime subscribers of Amazon.com, Inc. (NASDAQ: AMZN) at about 80 million in 2016, with about 62 percent coming from the United States and U.K.

The estimate from Blackledge, who reiterated his Outperform rating on the stock, comes as Amazon provided new global revenue mix disclosures in its '16 10-K.

Cowen Commentary

“Also 3P seller revenue disclosure shows strong growth, but implies lower GMV, which is bullish in our view, as there is more room for incremental share gains,” Blackledge wrote in a note.

Blackledge estimate a range of global paid Amazon Prime Subs of about 76 million–84 million in 2016, or about 80 million at the midpoint, based on the new disclosure coupled with Cowen’s proprietary US and U.K. Survey data.

Related Link: Amazon Echo Vs. Google Home: Gene Munster Breaks It Down

The high end of the range assumes 2.5 percent of Amazon’s Retail Subscription Services revenue is not related to Prime membership fees, while the low end assumes 7.5 percent is Non-Prime related.

Key Points

The analyst’s estimate hinges on the following key points:

  • “U.S. paid prime sub estimate of 42.5 million (on avg.) and a ~$95 annual ARPU in ’16.”
  • “UK Paid Prime Sub estimate of 6.5 million (on avg.) and a $103 annual ARPU (fx-adj.) in ’16”
  • “Rest of world (ex-U.S. & U.K.) paid prime subs of ~27-35MM in ’16, or ~31 million (midpoint) and a $44 annual ARPU (fx-adj.).”

Blackledge expects Amazon to be the No. 1 U.S. apparel retailer by '17 on accelerating purchaser growth and continue to gain traction in other retail verticals. The analyst also sees continued growth in AWS leadership in the fast-growing public cloud market.

At last check, shares of Amazon were down 0.06 percent to $842.16. The analyst has a price target of $1,050, implying a potential upside of about 25 percent from current levels.

Latest Ratings for AMZN

DateFirmActionFromTo
Oct 2019MaintainsBuy
Sep 2019MaintainsOverweight
Sep 2019MaintainsOutperform

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