Eq: Tech

(Seattle)

That is an eye-opening thought, is it not? Some investors and analysts are arguing that in light of FedEx’s stock being so beat up, Amazon should swoop in and buy the company. Amazon has been building its logistics operations for years, but buying FedEx could give it a big boost if it wants to become a shipping giant. One analyst summarizes it this way, “FedEx is inexpensive at 10.6x and 6.5x forward price-to-earnings and enterprise value to earnings before interest, taxes, depreciation and amortization multiples, respectively … Amazon could make an accretive acquisition of the best global network for a fraction of the cost of building it themselves”.


FINSUM: As mind-boggling as Amazon owning FedEx sounds, this idea appears quite logical and plausible.

(San Francisco)

Big tech companies got hit badly in last quarter’s selloff. On top of that broad volatility, Facebook has been going through its own particular troubles, most specifically related to the potential impact of its data leaks. However, all the bearishness may be in the past, and right now could be an excellent time to buy the stock, at least according to Jefferies. “FB’s status as leader in Social is unchanged and we see continued upside for FB shares as it digests the social hangover … FB remains a tier 1 platform for advertising spend with Instagram showing positive drivers of growth”, says the bank’s research team. The big growth driver is Instagram, whose revenue is growing at an estimated 60% annually. “We believe over the course of ’19, shares will slowly re-rate as rev growth & margin outlook become clearer”, says Jefferies.


FINSUM: We would tend to agree with this assessment. Despite all the concerns over data privacy, Facebook still has a very solid underlying business that is growing strongly.

(Seattle)

Are you looking to find a good investment thesis for Amazon? Look no further than their growing private label business, which could prove a catalyst for expanding margins and share price growth. According to an analyst at Suntrust Robinson Humphrey, “The rise of private labels and exclusives is one of the least understood/most under-appreciated trends within Amazon”. He continued, “This strategy should strengthen the flywheel effect of proprietary offerings/better user experience/higher retention/spend/share gain, and should prove accretive to margins over time”. The profit margins on own-branded products are 7-15% higher than on other branded products.


FINSUM: Because of their huge user base, Amazon is in a good position to benefit from selling their own brand, as they have a ready audience. This will likely improve overall margins as the business expands.

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