On The Rock
Top Themes of the Week
Happy Sunday!
We've had an eventful week with market reports. Consumer spending appears to be shifting back to physical goods, while e-commerce remains strong overall (see more on Amazon below). There are also cracks appearing in travel and experiential spending.
Advertising continues to face pressure, with traditional TV, outdoor, and audio struggling to offset price degradation with volume levers. Conversely, LATAM firms' digital advertising growth in 2022 leads with a remarkable 72.1% increase. MercadoLibre MELI 0.00%↑ saw its 5th quarter with >70%+ growth, hinting at continued growth in 2023.
Another Win For Big Tech: Amazon
Following positive results from Meta and Alphabet, Amazon AMZN 0.00%↑ also delivered a strong performance in its recent report. Highlights include:
Revenue growth returned to double digits at 11% YoY. The company outperformed in all revenue lines, including online stores, physical stores, 3rd party seller services, subscription services, advertising, and others.
Online stores revenue accelerated 5% in Q2. 3rd party seller Services revenue also witnessed 18% growth YoY.
AWS customers shifted from optimization to deploying new workloads. Focus on AI is likely to be a driver of growth in the future.
“Remember the core of AI is data. People want to bring generative AI models to the data, not the other way around. AWS not only has the broadest array of storage, database, analytics and data management services for customers, it also has more customers and data store than anybody else.” - Adam Jassy, CEO Amazon
Companies with the most amount of data in the world that rely on AWS, include, Google GOOG 0.00%↑, Tesla $TSLA, Netflix $NFLX, and Meta META 0.00%↑.
Advertising increased by 22% YoY, and they are working on improving capabilities for tailoring ads to specific audiences.
Amazon aiming to expand physical store presence beyond Whole Foods.
The market reacted positively, with the stock trading up 66.2% year-to-date. Looking forward, Amazon's guidance indicates a continuation of positive trends. The company remains committed to improving delivery speed and exploring opportunities in healthcare and AI.
Disney's Rollercoaster Ride
Disney's DIS 0.00%↑ report this upcoming week is more about the comments than the numbers. The company is facing challenges from various fronts, including:
declines in linear TV affiliates
declines in advertising
tough competition in Parks
streaming fatigue
The market consensus expects Disney+ to add 0-1 million net subscribers.
DraftKings: The Streak Continues
DraftKings DKNG 0.00%↑ experienced a turnaround over the past year, with Q2 surpassing all expectations. Revenue grew 88% YoY. The company's focus on efficiency, customer engagement, and retention has resulted in market share gains.
With a strong outlook and increased guidance for 2023, DraftKings is set to continue its momentum, particularly as the football season approaches.
Sports TV Deals and Partnerships
YouTube TV's multiview feature is now available for WNBA League Pass subscribers on YouTube TV and YouTube for supported Primetime channels. Users can now watch multiple streams at once on their smart TVs and streaming devices, enhancing their viewing experience.
ESPN and the Pro Football Hall of Fame have extended their media rights agreement, ensuring that the Enshrinement ceremony will continue to be aired on the network for years to come. ESPN has been broadcasting the ceremony since 1995.
FS1 has overtaken ESPN as the most-carried cable sports network in the US for the first time, despite a slight drop in households. FS1 is now available in 72 million households, while ESPN is in 71 million households.
Major League Baseball is reportedly discussing airing MLB games in some markets with ESPN. This comes as MLB considers not renewing contracts with Bally Sports for some teams, and there have been talks about becoming a part owner of ESPN (DIS 0.00%↑) .
The CW Network will become the exclusive home to the NASCAR Xfinity Series from 2025 to the 2031 racing season. The CW will broadcast 33 live NASCAR Xfinity Series races annually, along with practice and qualifying events.
