Amazon Acquires Self-Driving Startup Zoox

Amazon (AMZN) has announced that it is acquiring the self-driving startup Zoox. The online retail giant did not disclose the amount of the acquisition on June 26 but it is estimated to be in the range of $1.2 billion.

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“Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience,” said Jeff Wilke, Amazon’s CEO, Worldwide Consumer. He added, “We’re excited to help the talented Zoox team to bring their vision to reality in the years ahead.”

The acquisition comes after Amazon’s investment in the self-driving vehicle startup Aurora last year. Amazon noted on Friday that Zoox takes a different course in the autonomous driving industry by offering a “vision of purpose-built, zero-emissions vehicles designed for autonomous ride-hailing, along with an end-to-end autonomy software stack.”

Jesse Levinson, Zoox co-founder and CTO stated, “Amazon’s support will markedly accelerate our path to delivering, safe, clean, and enjoyable transportation to the world.”

Baird analyst Colin Sebastian agrees, saying on June 26 that it will accelerate Amazon’s deployment of autonomous vehicles while saving the company billions of dollars in R&D and logistics costs. He stated that it is a “big deal” and could be a “game-changing” combination with massive option value. The analyst maintains a Buy rating on the stock with a $2,750 price target implying upside potential of 2%.

Likewise, Monness analyst Brian White maintains a Buy rating, saying today, “Amazon continues to invest in next-gen tech to expand its reach as evidenced by last week’s agreement to acquire Zoox in the world of autonomous vehicles.” He raised the price target from $2,800 to $3,500 with a 31% upside potential.

Shares are down 1% at $2,665 per share on Monday morning.

Amazon’s stock is up 44% year-to-date with a Strong Buy analyst consensus that breaks down into 39 Buy ratings versus 2 Hold ratings and 1 Sell rating. The $2,810.19 average price target implies 5% upside potential for the shares in the coming 12 months. (See Amazon’s stock analysis on TipRanks).