Shares in Amazon (NASDAQ:AMZN) rose in early trading it announced the launch of it’s paid music streaming service. Named Apple Music Unlimited, the new service is aimed to compete directly with the currently market leaders, Apple Music and Spotify. These two giants currently account for over 50% of the subscription music market.
Digital streaming of music has seen huge growth in 2016 as the dynamics of the online digital music markets shift. Streaming of digital music is now up over 59% compared to last year. A notable decline in digital downloads has also been seen over this time. Clearly Amazon has recognized the dynamics of the markets are shifting.
The service will cost $7.99 per month for Amazon Prime members and $4 per month for owners of the Amazon Echo speaker. Other subscribers will pay $9.99. This is the same subscription fee as is currency changed by users of revival services Apple Music and Spotify. The unique proposition however comes from the speaker. This offers additional services including voice recognition. It also features a number of third party app services.
The announcement of the new service comes on the same day investment bank Cantor Fitzgerald announced an upgrade to its price target. The broker has forecast the price to end higher, with the price target for the stock set at $1000. This follows on from similar target upgrades from Alliance Bernstein and RBC earlier this year.
The company stands on a ‘demanding’ Price to Earnings Ratio (P/Ratio) of over 200. This gives the online retail giant little room for failure. However the current momentum of the company has been fueled by increasing rates of subscriptions for Prime subscriptions. This is expected to continue to drive foreseeable revenue generation. The estimated number of Prime subscribers worldwide now stands at 60 million.
Traders looking to profit from further anticipated growth in the company could look higher. Clearly analysis are expecting further price gains in the stock. If the price targets suggest are reached, then this represents a significant premium to today’s price.
Key support goes all the way back down to the original December 2015 high at $675.89. In addition near term $800.00 may provide initial support to any short term pullback.