“With the market current focusing on rotation to value, interest rates, reopenings, and tough e-commerce comps, we believe investors may be missing one of the most compelling subscription/quasi-subscription models within the Internet and Technology sectors,” Sebastian cheered.

Specifically, the analyst argues that one of the key strengths of the subscription service is its “ability to retain customers with compelling services, while simultaneously adding new ones cost effectively.” What’s more, Sebastian sees at least 75% of Amazon’s revenues as recurring revenue streams.

Looking at online stores, Sebastian estimates that Amazon is quickly approaching 200 million paid Prime subscribers, implying there are 400-600 million people shopping with Amazon regularly and driving 80% of the company’s e-commerce volumes, with the consumer ecosystem supported by services.

As for its third-party seller services, they should benefit from higher rates of retention and usage, in Sebastian’s opinion. He also makes the case that AWS revenues are recurring. “Specifically, the company’s market leadership in infrastructure-as-a-service tends to generate significant repeat usage, while the increasing portfolio of software services (e.g., Aurora) adds incremental quasi-subscription revenue streams,” the analyst commented.

Taking all of this into consideration, Sebastian views shares as “significantly undervalued, with a medium-term path to $5,000/share, based on robust fundamental trends in e-commerce, marketplace services, and cloud.”

With a 75% success rate and 34.8% average return per rating, Sebastian is ranked #28 out of over 7,000 analysts tracked by TipRanks.