A winner: Amazon and their acquisition of
Whole Foods for $13.5 billion. We don’t like to gloat, but here are our predictions around the acquisition. Okay, so we like to gloat a little. This deal will be for Amazon what Instagram was for Facebook: a genius acquisition that gives them an unbelievable growth vehicle. Amazon in our view is going to be the first trillion-dollar market capitalization company. The acquisition was essentially free as the marketplace said to Amazon hey it’s yours and bid up their stock more than the value of the acquisition price. In addition, other retailers were told that they are going to pay for this acquisition as their value was taken down the day that deal was announced. Grocery is ripe for disruption. It’s also the largest consumer sector weighing in at $750 billion — and Amazon is about to become the fastest-growing $1 billion-plus grocer. The markets are going to love that. Just one and a half percent of fast moving consumer goods sales in the US occur online. Even in South Korea, that enjoys the greatest global penetration, at just 16%, shy of the 20% tipping point that really causes disruption in the sector. Who’s the big winner here besides Amazon? Consumers. Have you ever wanted to shop at Whole Foods but it was just too damn expensive? Well, your prayers have been answered. Amazon is going to lay their operational
expertise across Whole Foods, bring down prices and also put in place their hurdle rates for profitability i.e. zero. As a result we’re about to get a
Mercedes for the price of Toyota. Whole Foods is about to become in a word, awesome. And who’s the most dominant company on the second most important screen in the world, your television? Netflix, but for how long? They’ve increased their original content budget to $6 billion only because Amazon’s feet they can hear behind them. Amazon is about to become the fastest-growing media company in the world and they’re going to get sports, they’re already streaming some NFL games. Look for them to capture the Olympics, March Madness or the Super Bowl with their infinitely cheap capital which will only expedite the incredible fall television is going to register or broadcast TV is going to register when they no longer have sports as their firewall of viewership erosion. And who’s the most innovative hardware company in the world? Yes it’s still Apple, but for how long? The most innovative hardware products of 2016 to 2017? The Apple Watch? The AirPods? No, Amazon’s Alexa. Oh and who happens to be the most dominant company in the fastest-growing tech sector, the cloud? Amazon. By 2020 Amazon will be our first
trillion-dollar market cap company. But don’t begin celebrating yet as soon
after a district attorney will realize that the fastest blue line path to the governor’s mansion will be to go after Amazon and break them up as we begin to connect the dots and realize this amazing company is destroying jobs faster than we can recreate them. 2020, a trillion dollars and the end of Amazon as we know it. We’ll see you next week.