Amazon.com, Inc.’s (NASDAQ:AMZN) entertainment studio head Roy Price submitted his resignation on Tuesday after sexual harassment allegation shadows have come to the light along with already rampant scrutiny of his close business alliance with now tarred and feathered movie producer Harvey Weinstein.
While some investors are left wondering whether such a big departure bodes poorly for the online auction and e-commerce leader from cracking its reputation to stalling plans for a Prime Video content production “ramp up,” Loop Capital analyst Anthony Chukumba believes the exact “opposite is true: “Amazon Studios was floundering under Price, and we believe he would have eventually been shown the door anyway.”
Therefore, not only is this not a negative, but in fact, the analyst commends this as a prospective key “blessing in disguise” for the company, maintaining a Buy rating on AMZN stock with a price target of $1,200, which implies a close to 22% increase from where the stock is currently trading. (To watch Chukumba’s track record, click here)
Calling Amazon’s performance at this year’s Emmy Awards frankly “embarrassing,” with the company winning merely two awards against rivals Netflix’s 20 and Hulu’s 10, or even last year’s own showcase of six, Chukumba writes, “Amazon Studios has been struggling with myriad problems, including low viewership, declining employee morale, and criticism from top Hollywood talent.”
Ultimately, “We think this move will allow Amazon to bring in a new studio head who does not have Price’s history, and could even win the company ‘points’ with Hollywood (rightly or wrongly) for acting swiftly and decisively last week by suspending him once Hackett’s allegations became public. We also think any setback in the timing of potentially creating ‘watercooler’ series will be insignificant given senior management’s long-term view of the company. Finally, we remind investors Prime Video—while a factor in driving Prime membership subscriptions—is not even remotely close to being a core business for Amazon,” contends Chukumba, who looks ahead to next year’s hope from the AMZN team “to create the next ‘Game of Thrones,'” a.k.a. a drama series bulls’ eye for a worldwide audience.
Wall Street largely roots for this stock giant, as TipRanks analytics showcase AMZN as a Strong Buy. Out of 32 analysts polled by TipRanks in the last 3 months, 30 are bullish on Amazon stock while 2 remain sidelined. With a return potential of nearly 22%, the stock’s consensus target price stands at $1,198.93.