Amazon’s big spending on NFL Thursday Night Football and Lord of the Rings content will only strengthen its lead over others in e-commerce and retail, an analyst has claimed.
In a new memo, Morgan Stanley analyst Brian Nowak estimated that Amazon would spend a shocking $1 billion to offer NFL games and the TV series ‘The Lord of the Rings: The Rings of the Rings’. power” to subscribers later this year.
“The strategic importance and timing of this content spend reinforces a broader strategy,” Nowak said, adding, “1) Prime members value video content (even more than same-day delivery or discounts), 2) Amazon is pressing its scale advantage as competitors slow spending, and 3) Perhaps investors should consider NFL and content investments as retention and research and development expenses.
The analyst reiterated a buy-equivalent overweight rating and $175 price target on Amazon shares. The shares were relatively flat at $142 during Monday’s trading session.
As for NFL Thursday Night Football, games starting this fall will be free for fans in local markets. But everyone will need to have a Prime membership to watch.
Wall Street expects both pieces of content to be catalysts for Amazon’s business.
“In particular, Prime Video will launch The Lord of the Rings: The Rings of Power September 2nd & Thursday night football will begin Sept. 15,” JP Morgan analyst Rajut Gupta wrote in a recent note to clients. Nor can we recall a longer content period planned for Prime Video, which should pay dividends in terms of Prime members and retail sales. »
Amazon’s hotly anticipated content comes as the company regained favor with investors after a better-than-expected second quarter. Amazon not only showed strong sales trends in an economic downturn, but also restrained spending to bolster operating profits.
Since the company announced its earnings in late July, it has also shelled out $1.7 billion to acquire the iRobot robot vacuum.
And on Monday, noted the value investor Baupost Group’s Seth Klarman disclosed stake in Amazon.
“We see a combination of attractive valuation and improving profitability helping drive outperformance in the second half,” Jefferies analyst Brent Thill said. “Furthermore, our sum-of-the-parts analysis implies that a minimum value is assigned to core retail [business].”