Morning Report: Today we are going to torture some financials.
News broke this morning that Amazon, the Intenet-centered, 21st-century conglomerate playing in the infrastructure, food, electronics, media, and delivery business will buy Whole Foods, a grocery group that was recently most famous for having a slightly rude CEO .
The all-cash deal, worth some $13.7 billion, will see Amazon add to its own grocery push, and bring a parcel of attractive store locations to its portfolio that could become much more valuable when fully integrated into Amazon’s own vertical stack.
At $13.7 billion, Whole Foods is selling for a comfortable premium over its prior valuation. Shares in the company are up 27 percent this morning, following the news. Using data sourced from Yahoo Finance, let’s examine the deal from a revenue perspective:
- Whole Foods trailing revenue: $15.86 billion
- Whole Foods value (today): $13.7 billion
- Whole Foods price-sales ratio: 0.86
Those numbers aren’t as bad as you might think, if you are more accustomed to technology multiples. As my friend Matthew Lynley pointed out this morning, “bro[,] it’s a grocery store.” Indeed.
From a profit perspective, here’s the same math:
- Whole Foods trailing net income: $402 million
- Whole Foods trailing price-earnings ratio: 33.44
So, notably, even Whole Foods trades for a very slim revenue multiple, it has a price-earnings result that is a bit more familiar to us in tech. And, now that we have done all of that, let’s have some fun.
What If We Value Whole Foods Like The Market Values Amazon?
Quickly, Amazon has far different figures than Whole Foods, namely the following (Yahoo Finance data, trailing)
- Amazon price-sales ratio: 3.33
- Amazon price-earnings ratio: 187.14
Those are different. Bearing in mind Whole Foods’ sale price, and various multiples, here’s how it would work out if we were to be as silly as to value the grocery business at the same rates as the Internet firm:
- Whole Foods, employing deal price, valued at Amazon’s price-sales ratio: $53.05 billion
- Whole Foods, employing deal price, valued at Amazon’s price-earnings ratio: $76.67 billion
As you can see, those numbers are both larger than 13.7.
What have we learned today? That not all revenue was made equal.
From the Crunchbase Daily:
Amazon buying Whole Foods for $13.7B
- Amazon surprised markets this morning by announcing plans to acquire Whole Foods Market, the grocery chain known for organic products and high prices. Under terms of the agreement, Amazon will pay $42 per share, a 27 percent premium over Thursday’s closing price, in an all-cash deal valued at approximately $13.7 billion, including Whole Foods debt.
Mobike secures $600M
- Bike-sharing service Mobike has secured $600 million in fresh funding to expand its global footprint. The latest investment brings total funding to more than $900 million for the Shanghai-based company, which currently operates in about 100 Chinese cities as well as Singapore and Manchester.
Slack said to be raising $500M
- Investors with a spare $500 million ave decided it makes sense to give it to Slack. The group work messaging platform is reportedly in talks to raise a half-billion-dollar round at a $5 billion post-money valuation, according to media reports. Previously, it was reported that Slack is also fielding acquisition offers from Amazon and others.
Human-named bots on the rise
- Siri and Alexa, you’ve got company. A growing number of popular human names are also doubling as names for AI-enabled bot startups. More than 20 such companies have recently raised funding, as the chatbot and digital assistant space heats up, according to a Crunchbase News analysis.