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TiVo Stock Down on Reports of Amazon's Live TV Recorder

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TiVo Stock Down on Reports of Amazon's Live TV Recorder

Shares of TiVo (TIVO) drop following a Bloomberg report that Amazon is developing a digital video recorder (DVR) for live TV.

TiVo Corporation TIVO shares declined as much as 10% in the afternoon trading session on Aug 17 on the news of Amazon AMZN developing a live TV recorder. Shares fell 4.3% to $12.2 at the close of trading.

Per Bloomberg, the online retail giant is developing “a new type of digital video recorder for the streaming era” called Frank that records live TV. Notably, Amazon is working with cable providers, which is anticipated to erode TiVo’s market share.

We note that TiVo has been underperforming the industry it belongs to over the past year, with shares losing 34.1% compared with the industry’s rise of 2.9%.

What’s Hurting the Stock?    

The company has been under severe pressure owing to the expected expiry of the Time Warp deal and ongoing litigation with Comcast. Moreover, intense competition is eroding TiVo’s subscriber base.

TiVo faces increasing competition from cable and satellite providers, who offer bundled up DVR service with digital cable in one set-top box at comparable monthly subscription rates and without any upfront costs.

Moreover, a number of companies have created competing DVR technologies and offer attractive licensing agreements to service providers and manufacturers of DVRs, thereby leaving little to no scope for differentiation.

Notably, significant competition from Alphabet’s GOOGL Google TV, Roku and Apple AAPL TV is a grave concern.

TiVo Corporation Revenue (TTM)

TiVo Corporation Revenue (TTM) | TiVo Corporation Quote

Potential for Upside?

TiVo is banking on new and renewed patent license agreements. The company’s new solution TiVo Experience 4 that was launched in the fourth quarter is also a positive. The incorporation of voice recognition with Amazon's Alexa is expected to help it gain further traction in the market.

Additionally, TiVo’s Software and Solutions products are showing great progress in the international market. Its Personalized Content Discovery Conversation solution is now available in German, Italian and Portuguese.

Moreover, the company expects to add more service provider partners for its new advertising product, Sponsored Discovery.

TiVo is now focusing on strategic alternatives, which could mean selling one or both of its segments to maximize shareholders value.

TiVo currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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