Amazon To Buy Target? That's Loup Ventures' 'Boldest' Prediction For The Year

When it comes to Amazon.com, Inc. AMZN’s acquisition prospects, Twitter Inc TWTR and RingCentral Inc RNG are so 2017.

This year, Loup Ventures and managing partner Gene Munster anticipates a Target Corporation TGT takeover.

The Rating

Loup Ventures does not issue ratings or price targets.

The Thesis

The e-commerce juggernaut spent the last 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. Target is seen to well supplement its offline efforts.

“Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster and his team wrote in a Tuesday note.

With mutual emphasis on moms and families, the combined entity could lend Amazon a boost in its Wal-Mart Stores Inc WMT rivalry. The pair generated about $176 billion in 2017 U.S. revenue against Wal-Mart’s $315 billion, and Target’s 2,300 sites would help diminish Wal-Mart’s 11,695-store lead.

“Getting the timing on this is difficult, but seeing the value of the combination is easy,” Munster wrote.

Assuming a 15-percent premium, he predicted a $41 billion takeover representing a mere 8 percent of Amazon’s $564 billion market cap.

Price Action

At time of publication, Target was trading up 1.8 percent at $66.45, and Amazon was up marginally at $1,174.43.

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Image Credit: Mjs92984 (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons