Loup Ventures Analyst Gene Munster Predicts Amazon Acquisition of Target


Loup Ventures analyst Gene Munster is predicting that Amazon (NASDAQ: AMZN) will acquire Target (NYSE: TGT) in 2018.

According to a list of eight 2018 predictions from Loup Ventures’ analyst Gene Munster, the Amazon-Target claim was his boldest prediction. He added that getting the timing of the acquisition was difficult, but understanding the value of the combination was easy.

Munster wrote that Target is the ideal offline partner for Amazon for two reasons —
• shared demographic, and
• a manageable but comprehensive store count.

“As for the demographic, Target’s focus on mom’s is central to Amazon’s approach to win wallet share. Amazon has, over the years, aggressively pursued mom’s through promotions around Prime along with loading Prime Video with kid-friendly content. As for retail stores, Amazon’s acquisition of Whole Foods 470 stores along with testing of the Amazon Go retail concept is evidence that Amazon see’s the future of retail as a combination of mostly online and some offline.”

— Gene Munster

Munster doesn’t think antitrust will be a factor preventing the acquisition and noted that despite gaining Whole Foods, Amazon’s 470 store presence is still much smaller than Walmart’s global count of 11,695.

“Looking at the top 18 U.S. retailers (including grocery), Walmart has about 23% share and an Amazon/Target combination would have about 13% share,” added Munster. “Lastly, Amazon can afford Target. If you assume they pay a 15% premium to the current TGT trading level would imply a take-out valuation of $41 billion, about 8% of the value of Amazon’s current $564 billion market cap.”

— Gene Munster

Munster, 46, co-founded Loup Ventures, a venture capital firm focused on virtual reality and artificial intelligence, in early 2017.

Before Loup Ventures, Munster worked for 21 years as an analyst at Piper Jaffray Cos., where he was recognized for his accuracy in predicting Apple Inc.’s financial potential.

Following Amazon’s acquisition of Whole Foods in August 2017 with a $13.7 billion purchase, several Amazon deals have been speculated by analysts lately …

In November 2017, DA Davidson analyst Tom Forte wrote that Lululemon Athletica Inc. may be an acquisition for Amazon.

Also in November 2017 CNBC speculated on the acquisition of Kohl’s by Amazon, describing Kohl’s $7.5 billion market capitalization as “pocket change” for Amazon.

Citigroup analyst Paul Lejuez speculated that Abercrombie & Fitch Co., Bed Bath & Beyond and Advance Auto Parts may be acquired by Amazon.

In October 2017, CNBC speculated that Amazon may be considering a move to sell prescription drugs online.

In December 2017, independent research firm CFRA’s bank analyst Ken Leon wrote that Amazon may acquire a small- or mid-sized bank in 2018. Amazon Bank?

See also …
loupventures.com 8 TECH PREDICTIONS FOR 2018

thefinancialbrand.com Amazon Bank: Will Banking’s Worst Nightmare Come True in 2018?

Arlingtoncardinal.com Amazon Dropping Prices at Whole Foods Starting Monday 8/28/2017 with Merger Official

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