Published: Fri, January 12, 2018
Business | By Max Garcia

Analyst predicts Amazon will purchase Target in 2018

Analyst predicts Amazon will purchase Target in 2018

"The fact that Target will have this service in place during 2018 will significantly improve its online competitive position", Charlie O'Shea, chief retail analyst for Moody's, tells CNN. It would be an interesting move by Amazon. "This may make it of interest to Amazon and would support the company's drive into physical retail".

Venture capital firm Loup Ventures issued its list of predictions for 2018 on Monday. Still, his early optimism about the iPhone means the markets listen to him.

Loup Venture co-founder Gene Munster is predicting that Amazon will acquire Target to expand its brick-and-mortar presence.

Munster characterises this forecast as his "boldest 2018 prediction".

Munster said Target's focus on moms is central to Amazon's approach to win wallet share. "Amazon has, over the years, aggressively pursued moms through promotions around Prime along with loading Prime Video with kid-friendly content", Munster wrote.

"Amazon believes the future of retail is a mix of mostly online and some offline", wrote the analyst.

In the report, Munster offers two reasons why Amazon may buy Target. Besides, Target is no Whole Foods in terms of size and when it comes to the old activist investor burning platform. Target's shares rose by almost 4% on Tuesday, likely in response to these reports.

Munster isn't alone in his thought that Amazon will spend big this year on another acquisition, although predictions of takeover targets vary widely. That's only about 8% of the value of Amazon's current $564 billion market cap. It does to some degree. It hit a five-year low this summer before recovering to finish out the year nearly exactly as it began.

Over 20 years Amazon boss Jeff Bezos has grown Amazon from a Seattle-based online bookseller into a global retail, tech and logistics leviathan.

For Amazon, big ambitious moves are necessary to really compete with Walmart.

Target in the USA is a listed company in its own right and Amazon will have to cough a premium up if it wants control.

Amazon has not made intentions on buying Target.

Nikki Baird, Managing Partner of RSR Research, echoed the view of many RetailWire contributors when she pointed out that Amazon is only four months into absorbing the Whole Foods acquisition. But Costco's stock has been healthy for decades, and it only has 741 locations in the US.

What Amazon gains with an acquisition of Target is around 1,900 retail locations. As recently as last week, the President went on a nonsensical rant about Amazon killing the Post Office. or something. Antitrust regulators won't have a problem with that. Is that today about 10 percent of stuff that's bought in the USA is bought online.

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