The US FTC (Federal Trade Commission) has said that it won’t block Amazon from buying One Medical. The e-commerce giant announced the $3.9 billion acquisition last year.
While Amazon stock (NYSE: AMZN) stock is trading slightly higher in premarkets today, 1life Healthcare stock is up sharply. Notably, while the FTC won’t block the deal it would continue its investigations into the deal.
FTC spokesman Douglas Farrar said, “The commission will continue to look at possible harms to competition created by this merger as well as possible harms to consumers that may result from Amazon’s control and use of sensitive consumer health information held by One Medical.”
Notably, when Amazon announced the deal in July, it valued One Medical at a significant premium.
One Medical would be the third largest acquisition for Amazon. The biggest was of course its acquisition of Whole Foods which helped the company increase its share in the US grocery market. The next biggest purchase was that of MGM which has helped the company increase the content on its Prime platform.
That said, One Medical was the first major transaction under Andy Jassy who took over as the CEO in 2021 only. It’s been a bumpy ride for AMZN stock under Jassy and it underperformed the markets in 2021 as well as 2022.
The stock’s market cap is again fallen below $1 trillion. It also disappointed markets with its Q4 2022 earnings and guidance. However, most analysts recommend buying the stock. There is a guide on how beginners can buy Amazon stock.
FTC Gives a Green Signal to Amazon Buying One Medical
Meanwhile, FTC’s decision to not block Amazon’s One Medical acquisition is a positive considering the fact that FTC chair Lina Khan has been critical of the e-commerce giant in the past.
Notably, AMZN sees healthcare as a key growth driver. The company along with JPMorgan Chase and Berkshire Hathaway set up a healthcare venture named Haven in 2019, but the venture closed in 2021.
However, this year, the company doubled down its focus on healthcare and announced a $5 monthly subscription service for generic drugs.
Healthcare has anyways been a new battleground for tech companies, along with AI. Last year, Alphabet led a $1 billion investment round into Verily which is its subsidiary focused on healthcare.
Big Tech Sees an Opportunity in Healthcare
Last year, TikTok parent ByteDance acquired a hospital chain in China. The acquisition had raised eyebrows as China has been against tech companies entering into other industries.
Among other tech companies, Apple, and Microsoft have also acquired tech companies. Apple believes that healthcare would be its “greatest contribution to mankind.” Apple has been gradually increasing its presence in the healthcare industry.
AAPL was the best-performing FAANG stock of 2022. Warren Buffett also bought more Apple shares last year 2022. It was the first time since Q3 2018 when Buffett bought Apple stock.
Coming back to Amazon, while the FTC greenlighting its One Medical acquisition removes uncertainty, the company faces several headwinds including a slowdown in US retail spending.
Both Home Depot and Walmart provided tepid guidance yesterday which led to a crash in retail stocks. The growth rates of Amazon’s cloud business, which has been its cash cow for years, have also fallen to all-time lows. However, the company is optimistic about its long-term outlook even as it is circumspect in the short term.
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