Will Elon Musk Buy Amazon? Move Doesn't Look Likely — Here's Why

Mohit Oberoi, CFA - Author
By

Jul. 1 2022, Published 8:48 a.m. ET

Ever since Elon Musk announced the acquisition of Twitter, which has now been on hold as Musk spats with the company over fake accounts, social media users have been speculating about Musk’s next move. Some wonder whether he will buy YouTube next while others believe the world’s richest person could get a bit experimental and buy Pornhub instead. Some are even speculating whether Musk would buy Amazon. Can Musk really buy Amazon?

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Apart from Tesla, which accounts for a large chunk of his net worth, Musk also owns several other companies like SpaceX, The Boring Company, and Neuralink. While Musk still hasn’t acquired Twitter, he's the largest individual investor in the microblogging site.

Elon Musk might not be able to buy Amazon — at least anytime soon.

Musk has a net worth of around $200 billion. He was able to generate the financing for his $44 billion Twitter acquisition without fuss as bankers were more than willing to fund the acquisition. Musk also contemplated selling some of his Tesla shares to fund the Twitter acquisition.

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However, buying Amazon is a different ballgame altogether. Despite the plunge, Amazon has a market cap of $1.1 trillion. The valuation is 25x the $44 billion that Musk has offered to buy Twitter for. Also, Amazon’s market cap is roughly five times Musk’s net worth.

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Even if Musk were to hypothetically sell all his other investments, he wouldn't be able to acquire Amazon. There's an option of a leveraged buyout also but not many financial institutions would be willing to fund the acquisition.

Also, while Musk seems to have tacit support from Twitter’s founder Jack Dorsey, Jeff Bezos doesn't appear to be in the mood to sell Amazon. He holds a nearly 10 percent stake in the e-commerce giant and in 2021 quit as the CEO, handing over the baton to Andy Jassy.

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There's the typical billionaire rivalry between Bezos and Musk.

Musk hasn’t had the best of relations with Amazon founder Jeff Bezos and we see the typical “billionaire rivalry” between the two. Musk dislodged Bezos to become the world’s richest person. As Tesla’s stock price soared to all-time highs, Musk became the first person ever to have a net worth above $300 billion.

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The two billionaires have similar business interests and Bezos’ Blue Origin competes with SpaceX. Amazon also backed Rivian, an EV (electric vehicle) company that was listed in 2021. Musk mocked the humongous valuations that Rivian attracted in the IPO.

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Musk has also called Bezos a "copycat" and Amazon a “monopoly,” backing calls from U.S. lawmakers to break the tech giant. The two billionaires have divergent views on some aspects — for example, hydrogen fuel cells. While Musk has mocked the technology, Bezos has invested in a hydrogen plane startup ZeroAvia.

Bezos too had mocked Musk’s offer to buy Twitter, suggesting that it would increase China’s influence. Incidentally, Tesla has a strong presence in China and even got approval to set up solo operations in the country, while all other foreign automakers had to necessarily form a joint venture with Chinese companies.

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Why would Musk want to buy Amazon in the first place?

Meanwhile, the basic question remains, why would Musk want to buy Amazon, unless he has a score to settle with Bezos. Unlike Twitter, which has been facing trouble as well as controversies over its free speech policies, Amazon doesn't face any major issues. The stock has sagged over the last year like Twitter, but that’s more to do with the sell-off in all the “stay-at-home” winners.

Musk might not have the time to run Amazon even if he somehow buys the company. To sum it up, Musk buying Amazon looks like a far-fetched dream, at least in the foreseeable future considering the financial and other aspects. Also, while acquiring Twitter makes sense for Musk, especially as he rediscovers himself politically, we don’t see any fit between Musk and Amazon.

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