Amazon.com Inc.'s (AMZN) - Get Report Amazon Studios head Roy Price resigned from his top position Tuesday amid sexual harassment allegations and criticism of his close relationship with disgraced producer Harvey Weinstein. While many analysts considered this a setback for Amazon Studios, Loop Capital Markets called it a "blessing in disguise."
Loop's Anthony Chukumba said Amazon Studios was "floundering" under Price. "We believe even absent the sexual harassment allegations he would have eventually been showed the door anyway," Chukumba wrote to clients Wednesday, Oct. 18.
Amazon Studios has recently struggled with "low viewership, declining employee morale and criticism from top Hollywood talent," Loop wrote. Amazon also won far fewer Emmys than competitors Netflix Inc. (NFLX) - Get Report and Hulu, which snagged 10 and 20 awards, respectively. Loop called Amazon's Emmys showing "particularly embarrassing."
"We think this move will allow Amazon to bring in a new studio head who does not have Price's history, and could even win the company 'points' with Hollywood," Chukumba wrote. "We also think any setback in the timing of potentially creating 'watercooler' series will be insignificant given senior management's long-term view of the company."
Amazon has been focused on ramping up content production for its Prime Video subscription service, Loop added, which is a factor in driving overall Prime subscriptions. But it's "not even remotely close to being a core business for Amazon," Chukumba noted.
Chukumba reiterated a "buy" rating and placed a price target of $1,200 on Amazon shares. Amazon stock traded lower 0.34% to $1,005.82 early Wednesday afternoon.
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