Amazon.com (AMZN) Stock Slides as Time Warner Might Take Hulu Stake
NEW YORK (TheStreet) -- Amazon.com (AMZN) - Get Report stock is falling by 0.24% to $664 in after-hours trading on Thursday, as Time Warner Inc. (TWX) reportedly enters discussions about buying a stake in streaming service Hulu, the Wall Street Journal reports.
The potential deal, valued above $5 billion, could help Hulu better compete with rival streaming services such as Netflix (NFLX) and Amazonby diversifying its content offerings.
Under the terms of the deal, Time Warner would invest cash in Hulu and agree to license additional content to the streaming service as part of a "long-term strategy" for Hulu, the Journal adds.
Walt Disney (DIS), 21st Century Fox (FOXA) and Comcast (CMCSA) each own one-third of Hulu, and would likely reduce their stakes to 25% each should the deal be finalized, the Journal reports.
Separately, TheStreet Ratings team rates AMAZON.COM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMZN's revenue growth trails the industry average of 45.5%. Since the same quarter one year prior, revenues rose by 23.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- Net operating cash flow has increased to $2,610.00 million or 47.70% when compared to the same quarter last year. Despite an increase in cash flow, AMAZON.COM INC's average is still marginally south of the industry average growth rate of 53.50%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market on the basis of return on equity, AMAZON.COM INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Powered by its strong earnings growth of 117.89% and other important driving factors, this stock has surged by 121.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- You can view the full analysis from the report here: AMZN
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.