Amazon's Zoox Acquisition Can Boost Logistics, Lower Long-Term Costs, Says Bullish BofA

Amazon.com, Inc. AMZN announced the acquisition of Zoox on Friday, a company that develops autonomous driving technology, including zero-emission electric vehicles, with a full-stack software solution for ride-sharing.

This represents Amazon’s biggest, but not first, foray into autonomous, and the move could expand its last mile delivery and freight shipping capacity while also lowering costs, according to BofA Securities.

The Amazon Analyst

Justin Post maintained a Buy rating on Amazon with a $3,000 price target.

The Amazon Thesis

The acquisition is still subject to regulatory approval and the deal amount has not been disclosed, Post said in the note. (See his track record here.)

The valuation of Zoox may have declined recently due to the impact of COVID-19 on the ride-share industry and the company laying off around 10% of its employees in April, the analyst said. 

Amazon acquired Canvas Technology and purchased a minority stake in Aurora in 2019, gaining exposure to autonomous vehicle development, he said.

In the long-term, Amazon could consider leveraging its investments in Canvas, Aurora and Zoox to introduce self-driving vehicles into its logistics network, Post said. 

Referring to the potential for cost-cutting, the analyst noted that Uber Technologies Inc UBER is estimated to lower costs from $2 per mile to 75 cents per mile by using autonomous vehicles.

AMZN Price Action

Shares of Amazon were down 0.56% at $2,677.73 at the time of publication Monday. 

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Courtesy photo.