NEW YORK (TheStreet) -- Amazon, (AMZN) told media outlets Friday that it has no plans to offer an ad-supported, on-demand entertainment service in the coming months, contrary to a Thursday Wall Street Journal report. It does, however, intend to unveil details of its streaming video business on Wednesday.
The denial was reported by Variety. An email to Amazon's press office was not immediately returned.
The conflicting articles forced Netflix (NFLX) investors to quickly switch positions. Some cashtaggers on StockTwits.com said they had established short positions or taken protection on longs after the Journal report. They spent the morning reversing those actions after Amazon reportedly said that, though it is always experimenting, it does not plan to offer a free, streaming service.
$NFLX covering majority of my short calls and puts this morning on the open. looking for reversal bounce. long common at this levelStarFireInvestments (@StarFireInvestments) Mar. 28 at 09:23 AM
Netflix fell 2% from yesterday's close, but recouped those losses after Amazon refuted the story. Netflix had a near 1% gain by 11 a.m. Amazon's stock rose more than 2% Friday morning.
The fear for Netflix investors is that a free on demand, streaming television service will steal much of the company's $95.88-a-year subscription business. A competing subscription service, like the free video streaming Amazon currently offers its "tens of millions" of Prime members, is also a threat to Netflix's business but a much less frightening one. Amazon has offered its more robust video streaming service since Feb. 22, 2011. Over that period, Netflix shares have risen nearly 71%.