TipRanksStock Market NewsAMZN NewsAmazon Is Said To Be In Talks To Buy Driverless Vehicle Startup Zoox
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Amazon Is Said To Be In Talks To Buy Driverless Vehicle Startup Zoox

Amazon.com Inc. (AMZN) is said to be in talks to snap up driverless vehicle startup Zoox Inc., in a deal that would expand the automation capabilities of the tech giant’s e-commerce business.

Zoox has been approached by other companies in the automotive and chip industries about a potential investment or acquisition proposal. The startup’s price tag is unlikely be lower than the $1 billion that it has already raised, according to a Bloomberg report.

“Zoox has been receiving interest in a strategic transaction from multiple parties and has been working with Qatalyst Partners to evaluate such interest,” the startup said. It declined to comment on Amazon’s interest. A spokeswoman for Amazon declined to comment.

Founded in 2014, Zoox had been planning to build a fully driverless electric-powered car by this year. However, after a 2018 funding round that valued Zoox at $3.2 billion, the startup’s board voted to oust CEO Tim Kentley-Klay. The executive criticized the move, saying the directors were “optimizing for a little money in hand at the expense of profound progress.”

Meanwhile, the Wall Street Journal reported that Amazon is in advanced talks to buy Zoox for less than the $3.2 billion valuation from 2018.

Amazon has in the past shown interest in investing in the automation of its e-commerce business. The online retail giant purchased warehouse robot-maker Kiva Systems Inc. in 2012 for $775 million and now has tens of thousands of robots in warehouses around the world.

Paying drivers to deliver packages is still one of the biggest costs in the company’s operation, according to Bloomberg. CEO Jeff Bezos announced plans for drone delivery in 2013, though they have yet to materialize at scale. Last year, Amazon revealed an experimental delivery robot called Scout in the Seattle area that rolls on sidewalks like a shopping cart.

Buying Zoox could help Amazon “manage rising shipping costs that we project will exceed $60 billion by 2025,” Bloomberg Intelligence analysts Jitendra Waral and April Kim wrote in a research note on Tuesday.

It looks like Amazon is on a shopping spree as the economic crisis induced by the coronavirus pandemic is creating opportunities for mergers and acquisitions. This month, it was reported that the world’s largest online retailer is interested in snapping up debt-strapped J.C. Penney Co. Inc (JCP) and has also held talks with AMC Entertainment Holdings Inc. (AMC) over a potential takeover.

Shares in Amazon have been on a steady winning streak appreciating some 28% so far this year.

Turning now to Wall Street, TipRanks data shows that overall analysts have a bullish outlook on Amazon stock. Out of the 40 analysts covering the shares in the last three months, 37 have Buys and the rest are split between 2 Holds and 1 Sell adding up to a Strong Buy consensus. Despite this year’s rally, the $2,673.17 average analyst price target still implies a 10% upside potential in the stock in the coming 12 months. (See Amazon stock analysis on TipRanks).

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