Trefis Members Expect Small Amazon Boost from Higher Kindle Margins and Units
Amazon’s (NASDAQ:AMZN) Kindle e-reader device competes with e-readers and tablets from players like Apple (NASDAQ:AAPL), Sony (NYSE:SNE) and HP (NYSE:HPQ). We currently have a Trefis price estimate of $107 for Amazon’s stock, about 15% below the current market price of $126.
Trefis members have created forecasts for two key drivers of Amazon’s stock over the last week: (1) Kindle Operating Margin and (2) Kindle Units Sold. The members’ forecasts suggest that Kindle Operating Margin as well as Kindle Units Sold will trend higher than the Trefis forecast. These projections indicate a combined upside of around 1% for Amazon’s stock.
We estimate Kindle Hardware constitutes around 1% of the $107 Trefis price estimate for Amazon’s stock. Hence the stock is not greatly impacted by (1) Kindle Operating Margin and (2) Kindle Units Sold. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
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The average of forecasts for Kindle Operating Margin created by Trefis members indicated a projected decrease from around 9% in 2010 to around 8% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 6% in 2010 to 4% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Amazon’s stock. In the past, Kindle Operating Margin has decreased from 10% in 2008 to 8% in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Amazon’s stock to Kindle Operating Margin.
Our complete analysis for Kindle Operating Margin is here.
The average of forecasts for Kindle Units Sold created by Trefis members indicated a projected increase from 2.5 million in 2010 to around 10.3 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 2 million in 2010 to 9.8 million by the end of the Trefis forecast period. The member estimates imply very little upside to the Trefis price estimate for Amazon’s stock. In the past, Kindle Units Sold has increased from 0.2 million in 2008 to 1 million in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Amazon’s stock to Kindle Units Sold.