‘15, we estimate AMZN will take 51% of US E-commerce growth and 24% of retail
The Bottom Line:
share of U.S. retail growth is growing significantly.
- In 2015, we expect AMZN will account for more than half of
For every $1 of E-commerce growth, AMZN will take $0.51.
For every $1 of total adj. retail growth, AMZN will take $0.24.
about the inverse of that: EVERY OTHER retailer is fighting for $0.49 and $0.76
of each dollar, respectively.
- AMZN’s share gains are accelerating, on our numbers.
U.S. E-commerce share will grow 400 bps (its fastest ever) this year to 26%, up
from 22% last year and 16% in ‘11.
- We believe that the accelerating gains are explained by one word:
We estimate AMZN Prime members now account for ~25% of total U.S.
households (this is likely quite conservative).
continue to believe that 50% of U.S. households will be Prime by 2020 (also a
conservative estimate, as explained below).
is still a lot of room to grow as AMZN accounts for just 3.5% of total adj. U.S.
retail sales (excl. autos, food and beverage, and gas).
Fig 1 AMZN Share
Source: Company Data, U.S. Department
of Commerce, Macquarie Research, December 2015
While 2015 saw AMZN’s stock
appreciate 114% in large part based on AWS, we believe that Prime will lead to
more gains in 2016. We are raising our AMZN PT to $760 from $740 and believe
that the retail business will drive growth.
Earnings and target price revision
change to earnings estimates, raise PT to $760 from $740.
- 12-month price target: US$760.00 based on a DCF methodology.
- Catalyst: Holiday sales data and 4Q’15 earnings
Action and recommendation
Macquarie Capital (USA) Inc.
+1 212 231 0644
Kelly Dougherty, CFA
+1 212 231 2493
21 December 2015
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