Simon Property Group and Amazon in Talks on Fulfillment Centers

Simon Property Group stock rose 6.5 percent in the pre-market trading session today at 7:25 a.m. ET. The stock rose on reports that the company is in talks with Amazon to convert some closed JCPenney stores and Sears stores into Amazon fulfillment centers.

According to a Wall Street Journal report, the conversations between Simon Property Group, the biggest mall owner, and Amazon started before the COVID-19 pandemic. The talks also started before mall stalwarts like JCPenney and Nieman Marcus filed for bankruptcy.

The report said, “For Amazon, more fulfillment centers near residential areas would speed up the crucial last mile of delivery…For Simon, turning over what was once prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.” Simon Property Group and Amazon declined to comment on the matter.

It is not certain how many stores inside Simon malls are under consideration for Amazon. The two companies might not reach a deal, according to people familiar with the matter. Simon malls have about 63 JCPenney stores and 11 Sears stores, according to a MarketWatch report.

Simon will likely release its earnings results for the June ended quarter on Monday after the market closes. Wall Street analysts expect Simon to post sales of $1.14 billion in the second quarter—a reduction of 18.1 percent YoY. Also, analysts expect the company to post an EPS of $0.98 in the second quarter, which represents a reduction of 39 percent YoY.

Simon Property Group stock rose 1.6 percent on Aug. 7 and closed at $62.19 with a market capitalization of $19.0 billion. Simon's stock price has fallen by 0.3 percent in the trailing five-day period, while it has fallen by 59.5 percent in the trailing 12-month period.

The stock is trading 62.0 percent below its 52-week high of $163.61. The stock was also trading 47.2 percent above its 52-week low of $42.25. On a YTD basis, the stock has fallen by 58.3 percent as of Aug. 7.

Among the 17 analysts covering Simon stock, six recommend a buy, while 11 recommend a hold. Their 12-month target price for Simon stock is $86.50, which is 39.1 percent higher than its price on Aug. 7.

Amazon stock fell 1.8 percent on Aug. 7 and closed at $3,167.46 with a market capitalization of $1.6 trillion. Amazon's stock price has risen by 0.1 percent in the trailing five-day period, while it has risen by 76.6 percent in the trailing 12-month period.

The stock is trading 5.3 percent below its 52-week high of $3,344.29. The stock was also trading 94.8 percent above its 52-week low of $1,626.03. On a YTD basis, the stock has risen by 71.4 percent as of Aug. 7.

Among the 50 analysts covering Amazon stock, 45 recommend a buy, four recommend a hold, and one recommends a sell. Their 12-month target price for Amazon stock is $3,611.39, which 14.0 percent higher than its price on Aug. 7.