Amazon Heads to $240 as New Kindle Lights a Fire in its E-Commerce Biz
The much-hyped Kindle Fire tablet is finally here. [1] With a price tag of $199, the Fire tablet is not expected to bring in a lot of money for Amazon’s hardware business. However, Amazon will see significant gains in its content & e-commerce business if its low-priced tablet manages to sell in high numbers. Previously, many companies have tried to enter the tablet market to counter Apple’s (NASDAQ:AAPL) iPad, including HP (NYSE:HPQ), Research in Motion (NASDAQ:RIMM) and Motorola Mobility (NYSE:MMI).
We currently have a price estimate of $240 for Amazon’s stock, which is about 11% above the current market price.
- Amazon Stock Is Up 22% YTD, What’s Next?
- Rising 18% YTD, What To Expect From Amazon Stock In Q1?
- Up More Than 100% Since The Start Of 2023, Where Is Amazon Stock Headed?
- Amazon Stock Outperformed The Q3 Estimates, What’s Next?
- Amazon Stock Is Up 50% YTD, Can It Top The Estimates In Q3?
- Amazon Stock Surpassed The Street Expectations In Q2
See Our Full Analysis for Amazon’s Stock
Amazon’s e-Commerce Could Get a Boost with Prime and Kindle Fire
With Kindle Fire sales expected to be in the 3-5 million range in Q4 2011 alone, [2] the tablet has the potential to add major scale to Amazon’s e-commerce business. Every Fire tablet would come with a free 30-day membership to Amazon Prime, [3] an otherwise paid-membership ($79 annually) which provides unlimited fast shipping of orders.
While this should increase Amazon’s share of online merchandise sales, the tablet can also push more Kindle Fire users to subscribe for the Amazon Prime service. These gains should be large enough to offset any losses Amazon faces on its hardware.
Tablet Should Give Other e-Content Providers a Run for Their Money
Kindle Fire’s impact is not restricted to e-commerce alone. The tablet also increases the reach of Amazon’s Instant Video, [4] a service that would provide instant access to thousands of videos, movies and TV shows present in Amazon’s video library. Additionally, Amazon is striving for stronger relationships with publishers in order to build its arsenal of online content such as books and music. All these developments are bound to scare competing e-content providers such as Netflix (NASDAQ:NFLX). All that remains to be seen however, is whether the mass market laps up the $199 tablet as quickly as Amazon expects.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes: