Market Overview

What Alexa On Amazon's Fire TV Means For Netflix, Roku, Spotify, Comcast

What Alexa On Amazon's Fire TV Means For Netflix, Roku, Spotify, Comcast
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On Thursday,, Inc. (NASDAQ: AMZN) unveiled its Fire TV Cube, which enables voice control of TVs and other home entertainment devices.

The tiny box has big disruptive potential.

The Rating

Morgan Stanley analysts Brian Nowak, Benjamin Swinburne and John Colantuoni maintained an Overweight rating on Amazon with a $1,700 price target.

The Thesis

Morgan Stanley considers the device's compatibility with Comcast Corporation (NASDAQ: CMCSA), DISH Network Corp (NASDAQ: DISH) and DirectTV a plus for the cable and satellite operators, who are mid-transition from pay TV to connectivity and will profit from availability on more devices.

“Whatever ceding of customer connectivity that comes from allowing pay TV content distribution over third-party devices is likely offset by the capital savings associated with costly set-tops and truck rolls,” the analysts said in a Thursday note. 

The Fire TV Cube presents undeniable competition for Roku Inc (NASDAQ: ROKU), but its effect on media companies is less certain, the analysts said. Over-the-top devices could boost content competitors like Netflix, Inc. (NASDAQ: NFLX) and weigh on live TV ratings, but they could also increase discoverability of broadcast content to increase access and viewership.

Finally, the devices improve accessibility of streaming services like Spotify Technology SA (NYSE: SPOT) and may drive household penetration, according to Morgan Stanley. 

Price Action

Amazon shares were down 0.4 percent at the time of publication Friday. 

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Photo courtesy of Amazon.

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Jul 2018Cowen & Co.MaintainsOutperformOutperform

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