Forget HQ2, Amazon (AMZN) Could Separate the Business - Citi

While Amazon (NASDAQ: AMZN) has a major announcement coming by year-end with the picking of its second headquarters, Citi analyst Mark May sees the potential for a much more impactful announcement - the separation of its Retail and AWS businesses.

May said several factors have led them to view the separation of the AWS and Retail businesses as making increasing sense and said investors should consider the potential of such a milestone event over the next 1-3 years.

These factors include:

• HQ2 could be intended to prepare for a spin-off
• Jeff Bezos' recent comments about the increasing importance of his space, education and other endeavors
• the increasing drumbeat for greater regulatory scrutiny

May said there are other benefits of separating the two divisions and that the benefits outweigh the reasons for not pursuing a separation.

The firm reiterated a Buy rating and $2250 price target on Amazon.

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