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Economic Moat

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Halo Bolsters Amazon's Margin Profile Through New Healthcare Subscription and Third-Party Offerings

Sector Strategist R.J. Hottovy

R.J. Hottovy, CFA Sector Strategist

Analyst Note

| R.J. Hottovy, CFA | Aug 27, 2020

The announcement of Amazon Halo--a healthcare monitoring subscription service--won't immediately move the needle on our valuation assumptions, but it joins Haven Healthcare (the healthcare joint-venture between Amazon, Berkshire Hathaway, and J.P Morgan) and PillPack as another pillar to wide-moat Amazon's broader healthcare aspirations while giving us greater conviction in our longer-term cash flow assumptions.

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Company Profile

Business Description

Amazon is among the world's highest-grossing online retailers, with $281 billion in net sales and approximately $365 billion in estimated physical/digital gross merchandise volume (GMV) in 2019. Online product and digital media sales accounted for 50% of net revenue in 2019, followed by commissions, related fulfillment and shipping fees, and other third-party seller services (19%), Amazon Web Services' cloud computing, storage, database, and other offerings (13%), Prime membership fees and other subscription-based services (7%), product sales at Whole Foods and other physical store retail formats (6%), and advertising services and cobranded credit cards (5%). International segments constituted 27% of Amazon's non-AWS sales in 2019, led by Germany, the United Kingdom, and Japan.

Contact

410 Terry Avenue North
Seattle, WA, 98109-5210

T +1 206 266-1000

amazon-ir@amazon.com

Sector Consumer Cyclical

Industry Internet Retail

Most Recent Earnings Jun 30, 2020

Fiscal Year End Dec 31, 2020

Stock Type Cyclical

Employees 798,000

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