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Amazon Should Pay Off Walmart And Take Flipkart For Itself

Apr. 06, 2018 3:58 AM ETAmazon.com, Inc. (AMZN), BABA, FPKT, WMT26 Comments
Siddharth profile picture


  • Is Amazon finally looking to end its battle with Flipkart?
  • Analysis of the two scenarios - a Walmart acquisition and an Amazon acquisition.
  • In the case of Amazon taking a stake in Flipkart, Alibaba could leave the market altogether.

A little more than a month ago, I had written how suitors were lining up to take a majority stake in India's Flipkart (FPKT) and how in the short-term this could give a bloody nose to Amazon (NASDAQ:AMZN) in its fastest growing market. If speculations are to be believed, Amazon wants to nip these ambitions of Walmart (NYSE:WMT) in the bud. The company is apparently gearing up to make a counteroffer after having held exploratory talks with the Indian e-commerce major. I discuss the implications of this new move in the ongoing chess battle between Amazon and its global peers.

(In the past, I have covered the Indian e-commerce battle in considerable detail through the following articles.

Alibaba Vs. Tencent: Competing In The Second Kingdom

Amazon, Alibaba Renew Battle In A New Geography

In India: Betting On An Amazon Victory

Links are provided for investors looking for a detailed read. This is a continuation of the Indian e-commerce series, and I don't intend to repeat previously discussed material here.)

Scenario Analysis

I projected a few scenarios and I am going to discuss a couple here. The only win-win is, of course, Flipkart and Amazon coming together to dominate e-commerce in India with an effective monopoly. But nobody likes sharing the first place and with both parties trying to convince each other that the future belongs to them, this is turning out to be a classic game theory puzzle!

Scenario 1: Walmart Picks a 40% stake in Flipkart

Scenario 2: Table by Author; Numbers in Billions of USD; Assumptions - Net profits were projected against each company. Figures for Walmart are based on a 40% stake. The losses in the initial rate increase at a 10% rate until year 8. Morgan Stanley estimates that the total e-commerce market in India would

This article was written by

Siddharth profile picture
My record can be checked the tipranks profile page - https://www.tipranks.com/bloggers/siddharth I have a Master’s degree in Physics and in my dissertation I worked on the utility of fractals in understanding chaos theory. The presence of a physicist is not without precedent in the financial world. I guess the considerable mathematical background gives us a decent advantage on Wall Street. As an individual, I have always been a hobbyist. So a lot of my free time these days revolves around building a predictive betting model. I find betting on sports (as an area of study) quite exhilarating from an academic point of view. It combines the best bits of math, finance, and sports into one super interesting field.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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