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Needham & Company analysts told investors in a note Wednesday that Amazon’s (NASDAQ:AMZN) Twitch is currently worth $45 billion, or 4% of the tech giant’s total market cap.
They explained that of this total, about $19B is Twitch’s “direct” value if it was separately traded, with $25.6B its “indirect” value, the value Twitch creates for other Amazon businesses.
“Twitch’s revenue in 2022 was >10x higher than in 2014 when AMZN purchased it. Like Cloud and Advertising, Twitch is another data point underscoring AMZN’s strong competence at building market-leading businesses in-house,” wrote the analysts, who have a Buy rating and a $120 price target on Amazon shares.
“If AMZN was willing to spin off 10% of Twitch as a separately-traded public company, we believe it would add a new group of shareholders to the AMZN story,” they added.
“New Twitch shareholders would be attracted to owing the market leader in live-streaming, very rapid revenue growth, and lower exposure to eCommerce than AMZN, we believe. Many investors we talk to do NOT like the capital intensity and low margins of AMZN today, but do love platform aggregators as a category, and media businesses specifically.”
