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Trending Ticker: Street buying Amazon's price hike

Jeff Macke
Breakout

Trending Ticker: Amazon.com (AMZN)

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Trending Ticker: Amazon.com (AMZN)

Trending Ticker: Amazon.com (AMZN)
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NOTE: Trending Tickers is an index compiled exclusively by Yahoo Finance every day. It’s a list of companies whose stocks are seeing the biggest bump in interest as measured by your Yahoo Finance Ticker searches.

Making the list today:

-Herbalife (HLF) - the nutrition supplements company moving lower after disclosing an FTC investigation into its practices.
-General Motors (GM) - the General trending a day after getting shellacked on an inquiry into an ignition recall.
-American Eagle Outfitters (AEO) - popping today after getting slammed yesterday on a Morgan Stanley downgrade.
-Plug Power (PLUG) zapping higher again, jumping as it reports revenue beating a lone estimate by Cowen.

And our trending ticker today, Amazon.com (AMZN).

Amazon is raising the price for its Prime rate to $99 bucks from $79. Neflix (NFLX) is at $7.99 already and they’re considering tier pricing, Hulu Plus is $7.99 a month-- the point being Amazon is competitive on pricing.

Now there was concern here (UBS downgraded Amazon in January because of it) that once Amazon raised the price for Prime people would defect. There’s about 20 to 25 million Amazon Prime members already, the idea that those people are going to walk over $1.67 a month price hike when they get free two-day shipping, they get to stream Amazon movie content and they get all types of other stuff, a bag of chips or something like that. People are not going to flake over this Amazon idea, the notion that customers were going to flake because they were going to be charged more for this service is just silly.

Amazon offering folks who sign up over the next few days to lock in that $79 price is going to get a huge number of folks to sign up…when they raise it to $99 a year, well, the cost-benefit analysis still works out in Amazon’s favor. The truth is customers will pay for a service when it’s a good service, when they get what they pay for and when it represents value. A $1.67 a month hike just doesn’t seem like something customers are: a) going to notice, and b) going to defect over.

People love Amazon, if you’re going to be short the stock (and I’m long the stock) but your thesis is that Amazon doesn’t make any money and now your second thesis is that Amazon Prime is going to cause customers to defect, you kind of have muddled thinking on the name and I’m not sure how that works.

It makes all the sense in the world to me that Amazon is up 2% but then again I’m long the stock so what do you expect to hear?

That’s your trending ticker for today. We’ll see you back here tomorrow.

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