Amazon May Buy Target In 2018

Mae Love
January 12, 2018

He says that Target is the ideal offline partner for Amazon as it has a shared demographic and a "manageable but comprehensive store count".

Loup Ventures' Gene Munster is predicting Amazon will buy Target in 2018. Munster is known for his decade-long bullishness on Apple's stock.

"Target's focus on moms is central to Amazon's approach to win wallet share". Target operates a large network of stores, with over 1,800 outlets across the United States.

The biggest issue is the financial structure mostly ignored by the bullish case of relentless revenue growth at Amazon.

"Predictions are useful, but it's not clear that whatever people from outside predict the company is going to follow this because they just did an acquisition last August", said Kotha about Amazon's recent Whole Foods acquisition. According to his analysis, the combination of Amazon and Target would eat up about a 13 percent share of the total retail market in the USA, still well behind Walmart's 23 percent share.

"Amazon will acquire Target", Loup Ventures' Gene Munster wrote on Monday in a post on his predictions for 2018. There's about 470 that Whole Foods has.

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Target has about $10 billion in net debt with long-term debt of about $12.6 billion on the balance sheet.

Munster noted the deal would not come without its fair share of obstacles, including increased scrutiny from the Trump administration that may look to use antitrust laws as a way to punish Jeff Bezos, Amazon CEO and owner of the Washington Post-which has regularly produced critical coverage of President Trump. The retailer offers a solid 3.8% dividend and repurchased 2.8 million shares in the quarter.

Although Target stock has added over 27% in the last nine months, analysts remain skeptical.

Analysts forecast the combined companies producing $248 billion in sales for 2017 and roughly $300 billion for 2018.

The e-commerce juggernaut spent the previous year building its brick and mortar base, seizing Whole Foods Market's 470-store portfolio and piloting its own book stores, grocery trucks and warehouses. Besides, Target is no Whole Foods in terms of size and when it comes to the old activist investor burning platform. Amazon didn't immediately respond to a request for comment. The hit to the balance sheet and the growth rate wouldn't turn out favorably for shareholders. It would take almost seven days for shorts to fully cover their positions, at the security's average daily trading volume. Investing includes risks, including loss of principal.

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