Today in the Market (6/7/2023)

Good Evening! On Wednesday, the US stock market fluctuated due to factors such as an unforeseen increase in interest rates by Canada, and an unanticipated decline in Chinese exports.

The S&P 500 and the Nasdaq declined by 0.38% and 1.29%, respectively. However, the Dow Jones ended the day in the green by 0.27%.

AFFIRM AND AMAZON?

Affirm Holdings (AFRM) experienced a significant increase after the announcement of a collaboration with Amazon (AMZN) Pay, a buy-now-pay-later company. The shares of Affirm surged over 20% throughout the day but ended up 2.40%.

So what does this mean? The agreement will enable vendors to utilize Amazon Pay to provide Affirm’s “Adaptive Checkout” service, which allows customers to pay their bills through a deferred payment plan. This technology is already used on both the Amazon.com website and the Amazon mobile application.

Why the move? The market for buy-now-pay-later services has become highly competitive, with companies such as Block (SQ) and Klarna competing for market share against established players like Affirm, PayPal (PYPL), and Apple (AAPL).  According to Affirm president Libor Michalek‘s, it is anticipated that digital wallets will constitute over 50% of global e-commerce transactions by 2025.

JOIN THE CLUB

According to reports, Amazon (AMZN) is strategizing to introduce an ad-supported subscription tier for its Prime Video service. This move is in line with the efforts of other streaming giants such as Netflix (NFLX) and Disney (DIS) to enhance the profitability of their streaming services.

Let’s get into more detail… according to a report by The Wall Street Journal, Amazon intends to introduce a supplementary ad-supported service to its existing Prime streaming offerings. The current Prime streaming plans are priced at $14.99 for members and $8.99 as a standalone service. There is no information about prices yet, but it should come in below these tiers and be in line with competitors.

This is only the beginning… Despite implementing cost-cutting measures in other domains, Amazon has been making significant investments in the entertainment industry. According to a report by Bloomberg in November, the corporation established strategies to allocate a budget of $1 billion towards the creation of 12-15 films annually, with the intention of exclusively showcasing them in theaters. On top of that, in the early part of last year, Amazon successfully concluded its acquisition of MGM for $8.5 billion.

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