Needham Says Amazon's Media Business Worth $500B Based On 'Hidden Asset Value'

Amazon.com Inc.'s AMZN media products have "hidden asset values" and are worth closer to $500 billion, about the same as its cloud business, according to Needham.

The Amazon Analyst

Needham analyst Laura Martin initiated a Buy rating with a price target of $3,000 per share on the company's stock.

The Amazon Thesis

According to Martin, the e-commerce giant's Prime Video streaming video-on-demand (SVOD) product alone is worth $187 billion based on 2020 revenue, CNBC reported.

Video live streaming platform Twitch has a value of about $15 billion, and advertising is worth $127 billion, according to the Needham analyst.

Martin attributes the rest of about $170 billion to the hidden asset values, CNBC noted.

"Media assets...improve [Amazon's] data flywheel because they improve [the company's] consumer data across more demos inside the home, which improves its next add-on product," she said in the note, as reported by CNBC.

The Needham analyst said that Twitch opens the company to a younger generation of consumers, and the Amazon Music arm strengthens its position at homes. The SVOD service is a major attraction for consumers to purchase the Prime subscription, she noted.

"Media assets typically trade at higher multiples than retailer multiples, so they pull [Amazon's] average valuation multiple upwards," Martin wrote in the note, saying the stock could be worth $4,500 to $5,000 per share in the long term, CNBC reported.

Price Action

Amazon shares closed nearly 1.7 higher at $2,615.27 on Tuesday. The shares added another 0.3% in the after-hours session at $2,623.