Amazon (AMZN) could potentially spin off its Prime streaming unit into a separate company, CEO Andy Jassy said Wednesday. During an extensive interview at the New York Times DealBook Summit, Jassy said that “over time, we have opportunities to grow our Prime video business into a standalone business with a very attractive economy.” Jassy also defended the holding company’s decision to “streamline” costs by laying off thousands of employees, pointed to changes in consumer spending in an uncertain economy and made clear Amazon’s intention to continue to grow. develop in the field of health care. The Club welcomes Jassy’s comments on cost containment, as well as his measured approach to developing Prime. Layoffs and Expenses Jassy said Amazon’s recent decision to lay off about 10,000 workers was part of an effort to drive more efficiency across the organization. But he said “it wasn’t bad to double down” on hiring more staff as business boomed at the height of the Covid-19 pandemic. Jassy said he has no regrets about the company’s pandemic strategy, including the company’s willingness to expand its infrastructure to meet growing demand. At the same time, he acknowledged that when increasing headcount, it is important to consider any sudden changes that may occur, even when a business is performing well. Amazon, whose workforce has exploded during the pandemic, has seen its growth slow as macroeconomic headwinds have intensified over the past year. Consumer trade on the decline Growing economic uncertainty means consumers are paying more attention to where they are putting their money and are increasingly looking for deals, Jassy said. “People care a lot about getting a good deal right now.” He added that in discretionary categories like electronics, consumers are turning to more budget-friendly models. “In tough and uncertain economies, we’ve seen over time that consumers are very careful who they choose to partner with, and they go with companies that are going to take good care of them and provide a great customer experience. and that’s always been something we’ve focused on very clearly,” Jassy said. Amazon’s Streaming Prime Video, one of the fastest growing streaming services, may one day become a standalone business, said Jassy. The unit has been bolstered recently by its Thursday night football show and the new Lord of the Rings series. “Our Prime Video offering is an important ingredient…more and more people are signing up for Prime because of video content,” he explained. Jassy said Amazon would continue to invest in sports, calling it a “unique” asset that drives Prime subscriptions. Amazon in Health Amazon takes d steps to grow its fledgling pharmacy business, Jassy said, a move that reinforces the company’s mission to be a one-stop-shop where customers can find any item they desire. “For a long time our customers wanted us to have a pharmacy offering and we built something there [but] we are still in the early stages,” he said. At the same time, Jassy said the healthcare system in the United States is “in dire need of reinventing itself” and hopes Amazon can be part of that reform. Amazon in July announced plans to acquire primary healthcare provider One Medical in a deal valued at $3.9 billion. Conclusion It is positive to see Jassy acknowledging that Amazon is overstaffed and overloaded with infrastructure. The stock, which has fallen more than 42% year-to-date, generally reacts favorably in the harvest phase rather than the investment phase, offering a glimmer of optimism for Amazon stocks in 2023. During this Time, Jassy’s comments about consumers trying to stretch their dollars come as no surprise, given that inflation has eaten away at many Discretionary Budgets in the United States. Finally, it makes sense that Amazon would want to grow Prime Video, and we’re glad to hear they plan to do so in a disciplined way (Jim Cramer’s Charitable Trust is long AMZN. See here for a full list of s tocks.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Amazon CEO says Prime could become a ‘standalone business’