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Amazon.com, Enthusiast Gaming, Netflix - perspectives of scalable business models

Mario Hose Mario Hose, news.financial
0 Comments| April 7, 2020

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Modern society is constantly finding new ways to simplify life and increase comfort. For example, there are now successful business models that would have been unimaginable decades ago. The monetization of access to the customer, for example in the areas of entertainment, gaming and shopping, is progressing with increasing reach. Economies of scale in various areas and increased efficiency provide the basis for organic and inorganic growth. The management of consumption and entertainment from home on the coach is enjoying widespread popularity.


Largest Player in North America

The Canadian company Enthusiast Gaming (TSX: EGLX) is the largest online gaming provider in North America. Every month, an average of around 200 million gamers are reached via various channels. In the fourth quarter of 2019, the company generated revenues of CAD 10 million. Compared to the previous quarter, revenue per user increased by an average of 31%, and compared to the same period of the previous year, an increase of 178% was recorded. The gross margin was 34% in the fourth quarter of 2019. A total of 1.7 billion views were counted and at the end of the fiscal year the company had cash on hand of CAD 13.2 million. Management achieved this growth organically and inorganically. With a share price of CAD 1.74, the company is valued on the stock market at around CAD 125 million.


The Global Number 1

When Amazon.com (NASDAQ: AMZN) started sending books by mail over 20 years ago, the company was literally burning money. However, the capital market provided the new economy player with sufficient liquidity and the global expansion could continue at any price. In the meantime, Amazon.com sets the conditions due to its market power and increasingly sends products via its own delivery service. The offer was perfected with subscription functions and digital products. The Amazon share is now worth around USD 2,000 and the company value is a substantial USD 1,000 billion. In 2001, the shares were still available at less than USD 6.00.


From Pennystock to Global Player

Netflix's (NASDAQ: NFLX) roots also go back to the late 1990s, when the company was still an online video store that sent DVDs to its subscribers. In 2007, Netflix began offering video on demand to its customers. Today, the company has approximately 160 million customers around the world who can access the service 24/7. Meanwhile, the trend has also developed that more and more people are migrating from classic TV channels to streaming services. Netflix's reach and offerings are clearly the recipe for success for a market capitalization of over USD 166 billion. Yesterday, the share price of the former Pennystock company was 380 USD.



CONFLICT OF INTEREST & RISK NOTE
We would like to point out that Apaton Finance GmbH, the owner of news.financial, as well as partners, authors or employees of Apaton Finance GmbH may hold shares in the aforementioned companies and that there may therefore be a conflict of interest. Further details can be found in our ´Conflict of Interest & Risk Disclosure´.


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