Amazon (AMZN) Will Continue to Dwarf Wal-Mart's (WMT) Online Business After Jet.com Combo

August 8, 2016 4:19 PM EDT
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It's abundantly clear that Wal-Mart's (NYSE: WMT) $3 billion takeover of Jet.com announced today is mainly about one thing - Amazon (NASDAQ: AMZN). Secondarily, Wal-Mart got Jet.com CEO Marc Lore, who, according to reports, was originally targeted by Walmart while at his prior company, Diapers.com, which incidentally Amazon bought in 2010. Lore will head up the legacy Walmart business, according to reports.

Cowen analyst John Blackledge said the the deal "demonstrates the impact Amazon is having on broader retail both for traditional retailers and for new E-commerce concerns like Jet."

The analyst believes Wal-Mart is paying a "steep multiple" but said it "may prove worthwhile if it jump-starts the offering. For Jet, we think the daunting reality of Amazon's scale likely tipped the balance in favor of sale after only two years."

Amazon will continue to tower over the combined company. Amazon operates ~290 distribution facilities worldwide. In addition, they estimate Amazon's US GMV at ~$147BN for '16, versus closer to estimated $1BN and $10BN for Jet and Walmart.com, respectively.



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