Tech News

Amazon leads declines in discretionary sector, streaming companies outperform – One America News Network

By Sinéad Carew

(Reuters) – Shares in closed down 4.2% on Wednesday, leading declines in the S&P 500 consumer discretionary sector while video streaming companies Warner Bros Discovery and Paramount Global rallied.


Amazon shares deepened losses after a Wall Street Journal report said the online retailer and video streamer is planning an advertising-supported tier for its Prime Video streaming service and that it is in talks with Warner Bros Discovery and Paramount about including ad-based tiers of their streaming services through Amazon Prime Video Channels.

Shares in Warner Bros, which also announced on Wednesday that CNN Chairman and Chief Executive Chris Licht had stepped down, ended up 8.4% at $13.12 a share. Licht’s departure also contributed to its rally. Paramount shares closed up 3.9%.

Amazon last traded at $121.23 after hitting a high of $127.37 shortly after the market opened. Wednesday’s move marked Amazon’s biggest one-day percentage decline since Feb 3. The stock is still up 44.3% so far in 2023.

“To me these are desperate moves because that’s money out the door to try to keep people on Amazon’s platform,” Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said regarding the report’s suggestion that Amazon is adding new video providers for Prime.

Forrest said the move would suggest that “the Prime service isn’t enough” to keep customers. Along with streaming video, Prime subscriptions also include free shipping for eligible products, which helps boost Amazon’s online sales.

For anyone who has dropped the Prime service, Forrest said they would “buy from somewhere else because nobody wants to pay for shipping and pretty much everybody is offering free shipping now.”

Along with concerns about the Prime platform, Forrest said investors have generally been more inclined to buy shares in smaller companies than mega-cap companies such as Amazon since the May jobs report issued on Friday.

While the S&P 500 fell 0.4% on Wednesday, the small cap Russell 2000 index closed up 1.8%. The S&P’s consumer discretionary sector, which includes Amazon, was down 0.9%.

Wednesday’s loss was Amazon’s biggest one-day percentage decline since early February.

(Reporting By Sinéad Carew, editing by Deepa Babington)


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