E-commerce in India is expected to be a $100 billion market opportunity by 2022, which makes it the second-biggest economy in Asia and the world’s second-biggest internet market. But India’s government may have just stepped on the brakes by limiting how much Amazon (AMZN) will be able to control the market.
Amazon has had to withdraw loads of products in India due to new rules that forbid online retailers from making deals with sellers to offer products exclusively on their platform, and from selling vendors’ products where the retailer owns a stake in the vendor. However, Amazon has since gone on to restructure its equity stake in some of the its India sellers, which has allowed their products to return. For example, Amazon reduced its stake in one of its most prominent sellers, Cloudtail, to below 26%, which is a loop hole around the new regulation.
SunTrust’s top analyst Youssef Squali noted, “We believe the situation in India is likely to remain fluid, and still represents a short-term headline risk and a long-term strategic risk for AMZN.” Squali rates AMZN shares a Buy with price target of $2,220, which implies nearly 40% upside from current levels.
Next up is Facebook (FB), which has been clobbered with a landmark ruling in Germany that could mean huge changes to the way it collects data for 32 million users in the country. Specifically, Germany’s Federal Cartel Office, the country’s antitrust regulator, forbade the social media giant from automatically bundling user data collected across its own platforms. The issue is Facebook’s personal data collection from outside its core service—not only from Facebook properties such as WhatsApp and Instagram, but also third-party sites that feature its “like” and “share” buttons. The antitrust regulator doesn’t believe Facebook’s users understand how this data is collated and used; it particularly doesn’t like that users are forced to agree to all this if they want to use Facebook itself.
Squali commented, “We believe this is a meaningful ruling against Facebook, which would require a fundamental altering of its data collecting practices, and which could have negative effects on its monetization capabilities over time. We believe this could also have broader implications in other jurisdictions, but for now Facebook is in the process of appealing the ruling.” The analyst rates FB stock a Buy with a $210 price target, which represents about 27% upside from where the stock is currently trading.
Squali is one of the top analysts on Wall Street covering the Internet sector. His picks average a 19.5% one-year return, and he’s ranked #59 out of 5,137 analysts on Wall Street, according to TipRanks. To watch Squali’s latest ratings and price target on TipRanks, click “follow” on the left.