CFRA media and entertainment analyst Tuna Amobi spoke to Business Insider’s Sara Silverstein about what 2018 holds for Amazon. According to Amobi, “Amazon will make an unconventional acquisition in this 2018.” Following is a transcript of the video.
Sara Silverstein:What about Amazon? What does 2018 look like for Amazon?
Tuna Amobi:Amazon – I think the future looks incredibly bright for them. We expect them to spend north of four billion or more this year in content, almost double what they have spent thus far. So when you think about Amazon, right? So they have got this core business of e-commerce, where they’re the de facto leader at gaining market share not just in the US and internationally. Then you’ve got all these other ancillary businesses, which are driving huge subscriber growth in their prime membership. So think about video, hardware devices, all the EchoandAlexa devices.
So Amazon – I think they really have their A game right now, where they have kind of taken a step back and started to look critically at areas where they’re going to be investing even more aggressively. They’re doing that already in international markets, such as India and China. So I think the playbook is somewhat similar to Netflix, where they’re doing all the things – blocking and tackling within the domestic market – and also aggressively expand internationally, where you have markets like India having huge upside and barely even tapped by any of these companies. So that’s where you’re seeing international becoming more and more of a major catalyst, which I don’t think is properly reflected in the share prices.
Silverstein:And is there anything that could mess it up for Bezos or could completely derail Amazon?
Amobi:Well with Amazon, you never know. As you know, investors always scratch their heads, what’s going to be – that’s not next quarter or the other quarter where, you know, spending is going to get out of hand and potentially push the company into a loss situation. So I think, for them, the challenge to your question is todemonstrate a consistent track record ofprofitability, you know, quarter-in, quarter-out, year-in, year-out.They haven’t done that yet. I think they will; they’re well-positioned to do that.
Silverstein:When? When do you thinkthey’lldo that?
Amobi:I think it’s probably a few years out but you know, we’re very excited about this Amazon Web Services unit, right – thecloud infrastructure business which by, you know, far and away is the fastest growing division within Amazon. We think that they could be well-positioned to spin that out as a separate business, which could unlock further value. So I think if you’re Amazon, you’re in a very good position. You’re growing yourPrimesubscriber base at a very fast clip around the world. You’re investing aggressively in content and hardware devices. Your fulfillment centres are getting a lot of scale benefits. And then the Whole Foods acquisition; let’s not forget about that. We think thatthatacquisition is going to provide additional touch points for the company to grow its other ancillary businesses.
Silverstein:It seems like there’s no business that’s off-limits. What’s the next business do you think Amazon might get into?
Amobi:We think, according to our predictions for this year, that Amazon will make an unconventional acquisition in this 2018. And you look across the landscape, there’s a variety of areas where I think the company has, what I might call, the core infrastructure to enable them, whether it’s live ticketing, for example, or even pharmaceuticals distributorship, apparel, other segments or categories within retail where the company could potentially take the next level and invest aggressively and disrupt the traditional players, which is what they do best.
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