Needham Analyst Says Amazon’s Media Division Worth $500 Billion

One-fifth of Amazon's Prime members say the streaming media services is what attracts them to the platform.

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According to one analyst at Needham, Amazon’s media division is worth around $500 billion in assets. The analyst, Laura Martin, says those assets are worth nearly as much as Amazon’s cloud-computing division.

The assets include Prime Video, Twitch, and Prime Music, among others, and Martin estimates their individual values to be $187 billion, $15 billion, and $3.8 billion, respectively. Advertising accounts for another $127 of the media business’s $500 billion value. The rest is comprised of its “hidden value,” according to Martin.

Martin notes that one-fifth of Amazon’s Prime members state that its streaming services are what draw them to Amazon’s media platform and encourage them to take advantage of the membership. The analyst also points out that Amazon’s media products have “hidden asset values.” For instance, Twitches streaming game platform appeals to younger consumers, while Amazon’s Music division strengthens its position.

“Amazon’s media strategy supports our view that the company employs a ‘land and expand’ strategy by entering consumers’ homes through its e-commerce business and subsequently adding services to its consumer-facing bundle that increases value. Media assets also improve Amazon’s data flywheel because they improve Amazon’s consumer data across more demos inside the home, which improves its next add-on product,” Martin said.

The Needham researcher initiated a $3,200 price target on Amazon’s stock, although she said it’s more likely to be worth $4,500 to $5,000 over the long term. Martin has given the stock a “buy” rating.

Shares of Amazon are up by 42 percent so far this year. Shares were up by 1.7 percent on Tuesday and then by 0.98 percent on Wednesday, closing at $2,640.98. This gives Amazon a $1.3 trillion market capitalization.

Martin pointed out, “Media assets typically trade at higher multiples than retailer multiples, so they pull Amazon’s average valuation multiple upwards.”

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