5 Questions With Gene Munster – The MN VC Who Believes That $AMZN Is Poised To Buy $TGT

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20 years plus Piper Jaffray Research Analyst turned Loup Ventures VC Gene Munster has stated – on more than one occasion – that he believes that Amazon ($AMZN) is going to acquire Target ($TGT). 

What a fascinatingly bold prediction that is. 

Building off a recent comment thread about how Amazon played Minnesota – here are five questions with him about that notion:

When do you believe this sort of marriage will occur?

Our current timing is within the next three years (end of 2021). The rational for the three year timing is two fold: On the positive side there is some urgency for Amazon. It’s clear Amazon has greater ambition in brick and mortar. One the negative side, I was wrong about Amazon acquiring Target in 2018. It has reinforced the reality that it takes time for big things like this to come to fruition.

Why do you believe that it will happen?

We believe it will happen for the same reasons we had a year ago. These include:

  • Offline sales will always be a big part of retail. Amazon has ambitions to be the world’s largest retailer. To accomplish that they need to dramatically increase their brick and mortar presence. There are 11,000+ Walmart stores worldwide, and including Whole Foods along with Amazon’s own stores equates just over 600 stores. In other words, Amazon has a long way to go.

  • They both pursue affluent customers. Market research firm GfK MRI estimates the median household income for an Amazon shopper is $90,100, similar to Whole Foods at $95,200. Target reports its average shopper earns $87,000. These far exceed the U.S. median household income of $55,322.

  • Brick and mortar will get more advanced. Stores would be monitored by computer vision systems; shelves would be stocked by robots; customers would be helped by service robots that understand natural language; and checkout would resemble Amazon Go locations, where customers simply walk out with their purchases. In 2018, Amazon has announced further rollouts of the Amazon Go Store which is evidence the company intends to make retail tech savvy.

Do you have a financial interest in either company right now?

We do not have a financial interest in either company.

Do you have a financial interest in a merger/acquisition between $TGT & $AMZN?

We do not have any potential financial interests.

If you were to bet on this future market event – what positions would you take regarding either $TGT or $AMZN in the market today?

I would own Target. The reason is straightforward – Amazon will likely have to pay a premium to acquire the company.

Comments

  • http://tech.mn Jeff Pesek

    I followed up after to ask Gene: “If you’re confident that this is going to happen and the play is to own $TGT – why don’t you?”

    He said: “The reason why I don’t own TGT is because I don’t own public companies that I research.”

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