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Citi: Amazon should split

26 September 2018

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by Anchor

In a report released last week, Citi Research analyst Mark May reiterated a Buy rating on Amazon and suggested the firm split into two companies to avoid US antitrust scrutiny. May wrote that “There has been greater noise of late regarding the desire to investigate and potentially regulate the company. By separating the retail and its cloud computing Amazon Web Services (AWS) businesses, Amazon could minimise or avoid the risk of increased regulatory pressure.” May noted that US President Donald Trump is “obsessed” with Amazon and the company is getting even more scrutiny due to its c. $1trn market cap and Founder and CEO Jeff Bezos’ status as the richest person in the world. May estimates a c. $400bn enterprise value for Amazon’s retail segment and $600bn for AWS.

Citi reaffirmed the target price (TP) at $2,250/share – 12% upside to Tuesday’s (25 September’s) close.

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