Tablets Could Be Big Winner for Amazon.com, Inc.
Amazon.com, Inc. (NASDAQ:AMZN) has been a hot stock so far this year. In less than 12 months, the AMZN stock price has more than doubled. The company has a dominant position in the e-commerce business and is growing its cloud services at an incredible pace, but there’s more. With millions of customers rushing towards Amazon’s tablets and TV sticks, Amazon’s device sales could give a further boost to its bottom line and its stock price.
Strong Holiday Sales of Amazon’s Devices
The company just had its best ever weekend for Amazon device sales. On Amazon.com, the top selling product across all product categories this Black Friday was the “Amazon Fire,” while the second top selling product was the “Fire TV Stick.”
Compared to last year’s Thanksgiving weekend, sales of the Fire tablet more than tripled. Moreover, the Fire tablet is the fastest-selling Amazon tablet ever, with millions sold since its launch.
Additionally, from July through October, Fire TV was the number one streaming media player in the U.S. across all retailers. Over the holiday shopping weekend, sales of Amazon Fire TV jumped up more than six times year-over-year. Amazon’s “Kindle” e-reader also did well, too, with hundreds of thousands being bought during the weekend. (Source: “Record Weekend for Amazon Devices—Up 3x Over Last Year, with Millions of Devices Sold,” Amazon.com, Inc., December 1, 2015.)
Part of the success of the Fire tablet was its pricing strategy. With a $49.99 price tag or $250.00 for a six-pack, the device is less expensive compared to rivals. For consumers new to the tablet market, the low price point of Amazon’s Fire tablet looks like a great place to start.
The company is also opening new markets for its devices. On December 3, Amazon announced that its fastest-selling tablet, the Fire, is now available in China. The pricing is attractive, at just 499 yuan. The company believes that with access to Kindle books and with English language learning features, the Fire could be an easy and affordable option for Chinese customers who want to read or learn English.
Amazon.com also announced an agreement with Chinese Internet services company Baidu Inc. (NASDAQ:BIDU) to provide search, app, and online video services for Fire tablets in China. This is not the first time Amazon has launched a device in the Chinese market; the company’s Kindle e-reader is already enjoyed by many Chinese customers. (Source: “Amazon Fire Tablet Now Available in China,” Amazon.com Investor Relations, December 3, 2015.)
The Bottom Line on AMZN Stock
Note that other than Amazon’s growth in its device sales, the company has achieved something big this year: being profitable. In the third quarter of last year, the company was not making money. It had a net loss of $(437) million, or $(0.95) per share. In the third quarter of this year, the company had a net income of $79.0 million, translating to earnings of $0.17 per share.
With its device sales starting to show strength, AMZN stock could shift to a steeper growth path.