Did Amazon Make A Mistake With Whole Foods?

There is never a dull moment is there? This morning out of left field Amazon (AMZN) announced it was buying Whole Foods (WFM). Which sent both stocks up.
amazon and whole food chart

AMZN Price data by YCharts

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Which sent the other grocers, Wal-mart (WMT), and Costco (COST) sharply lower.
costco krogers walmart price chart

COST Price data by YCharts

and the organic distributors.
Hain unfi price chart

HAIN Price data by YCharts

Makes you think this a net negative all around, well except for Amazon. Potentially, or did Amazon make a mistake? Time will tell, just ask yourself how much more Margin can Amazon squeeze? WFM had $15.72 Billion in Revenue in 2016 and net income of $507 million, that is 3.2 percent. Ocado, an on-line grocer in the UK,  had total revenue in 2016 of £1.27 billion and before tax income of £12.1 million.  Just a thought. Different market, different pricing power, different market share. I know.

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Disclaimer

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request the advisor will provide a list of all recommendation made during the past twelve months. Past performance is not indicative of future performance.