MarketBites Daily Investment Commentary: Amazon Bulks Up Streaming I Peloton’s $400M Announcement

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Top Investment Story #1: Amazon Looks To Streaming
What is Happening?:

Late Monday, reports leaked that Amazon ($AMZN) is in talks to purchase MGM Studios for approximately $9B. The move indicates that Amazon is preparing to become a major force in streaming and content production.

Why Does This Matter:

Amazon appears close to closing the firm’s second largest deal in its history. The $8.5 – $9B deal to take over MGM Studios is only eclipsed by the firm’s acquisition of Whole Foods for #13.7B in 2017.

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MGM is famous for its production of multiple well-known television series and films including “Rocky,” “James Bond,” “Shark Tank,” “Real Housewives,” “Survivor,” and “The Voice.” The production studio has been looking for a strategic buyer for years, according to recent reports. Multiple private equity firms were responsible for reviving the film house from bankruptcy over the past decade.

The acquisition comes at an interesting time, since just last week it was reported that AT&T would sell a majority of WarnerMedia to Discovery. The consolidation within the media industry has picked up at an unprecedented rate.

For Amazon, the move comes at a pivotal moment while the firm enters the streaming war against Netflix, Disney, AT&T, Discovery, Paramount, and others. Supply gluts due to Covid-19 have hit content production with force. The acquisition of preexisting hit content will help Amazon Video navigate these production delays in the near term. For the long term, Amazon adds an impressive portfolio with a management team that has decades of experience. The Seattle mega-cap also recently agreed to an annual $1.2B deal with the NFL, for exclusive streaming rights to Thursday Night Football.

The Takeaway:

Amazon continues to do it all. Just when some speculated that the firm had little interest in pursuing the streaming audience, Amazon makes a massive splash. If past acquisition results are any indication of the firm’s performance in the streaming space, it is likely that Amazon will be a streaming staple in short time.

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– By Jack Dunne

– Published in MarketBites Daily Newsletter


Meet the Authors
Top Investment Story #2: Peloton’s Expansion
What is Happening?

Peloton ($PTON) announced Monday that it plans to implement a $400 million investment to create its first U.S.-based factory. The investment appears to be a strategic move to speed up production and delivery of its popular cycles, and high-end treadmill machines.

Why Does This Matter?

In Q1 of 2021, Peloton’s ($PTON) total revenue surged 141% to $1.26 billion, from $524.6 million a year earlier. Peloton expects sales in Q2 to be $915 million. They are planning to put the money right back into furthering the business.

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Peloton selected a 200-acre site in Wood County, Ohio to construct more than 1 million square feet of manufacturing, office, and amenities space. They expect to break ground later this summer, which should bring more than 2,000 jobs to that area. The facility should be up and running by 2023.

 

Currently all of the production of Peloton’s products are through third-party facilities in Asia. In February, the firm said it would spend more than $100 million to speed up shipments using air and expedited ocean freight.
Peloton also acquired fitness manufacturer Precor for $420 million, gaining manufacturing facilities in North Carolina and Washington as well.

Earlier this month, Peloton recalled both of its treadmill machines over safety concerns however. The company’s less-expensive model, the Tread, was slated to go on sale in the U.S. this week. Respectfully, the launch was delayed to add new safety features, which could come as soon as this summer.

The Takeaway:

Peloton fell nearly 1% Monday afternoon, but rebounded and managed to finish the day positive. The frustrations around supply should be alleviated, expansion is on the horizon, and this is should be great news for consumers and investors alike.

Expect further announcements on Peloton’s expansion plans to impact its share price.

By Jack Dunne

– Published in MarketBites Daily Newsletter


Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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