Kindle Fire Lifetime Value Should Give Investors Cheer Heading into Q4 Results

While Amazon’s (NASDAQ:AMZN) dangerously low margins are a source of concern in the upcoming full year 2011 results, a recent statistic released by RBC Capital Markets reaffirms our earlier stance that the media consumption on Kindle Fire would be instrumental in reviving future margins for the company. Amazon competes in the e-commerce and e-content space with companies like eBay (NASDAQ:EBAY).

See our full analysis for Amazon’s stock here

The statistic, which projects an expected lifetime operating income of $136 for the Kindle Fire, ^[1] could not have come at a better time for Amazon, especially considering that the Kindle Fire is at a very early stage of its launch. Additionally, it should provide comfort to investors who expect margins to stay below the 2% level for Q4 2011 as well.

Source: RBC Capital Markets (via AllThingsD)

We currently have a price estimate of $233 for Amazon’s stock, which is currently around 20% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Amazon’s Kindle Fire Profitable: You Bet, AllThingsD, 20th Jan 2012 [↩]