What's in the Amazon-Whole Foods Cart for Investors, Traders?


Steven Pomeranz Image Steven Pomeranz Host, The Steve Pomeranz Show

As Amazon buys Whole Foods, what’s the future look of shopping? What’s ahead for investors and traders? Answers from Steve Pomeranz, CFP, who is the host of an investment program on NPR affiliates.

On June 16,  the e-commerce giant, Amazon (AMZN), announced plans to acquire Whole Foods Market (WFM) for $13.7 billion, or $42 per share, about a 36% premium to the Whole Foods $33 per share closing price the day before. 

Amazon is the 8,000-pound gorilla in e-commerce, with a market cap of about $462 billion and annual sales of about $136 billion. And the company’s been on fire over the past three years, with sales up 80%, earnings up almost 800%, and shares up threefold from $300 per share in mid-2013 to around $1,000 per share recently.

The acquisition announcement caught everyone by surprise and sent shock waves through America’s retail grocery business.  The next morning, several other major retailers saw their shares open sharply lower on fears that Amazon’s entry into brick-and-mortar grocery was bad news for existing players.

What’s the big deal?

Now, you might wonder: what’s the big deal?  Walmart (WMT) has annual sales of $490 billion–that’s four times Amazon’s annual sales… so what’s all the fuss about?

Many things… but let’s just start with growth.