This morning, shares of Amazon (NASDAQ:AMZN) were declining due to a mix of factors, including a general market sell-off due to concerns about increasing interest rates and rumors that Amazon was planning to make an offer for home healthcare specialist Signify Health (SGFY 32.08%).
The shares of Amazon (NASDAQ:AMZN) were down 3.3% as of 10:18 AM ET.
What’s the Story?
According to a Wall Street Journal report from over the weekend, Amazon (NASDAQ:AMZN) is among the companies interested in acquiring Signify Health. It announced in early August that it was open to being acquired. Signify, a company that makes tools for home health care providers, saw its stock price rise by about 40% on the news, while Amazon fell. The home healthcare company might be valued at over $8 billion, and the tech giant is competing with CVS Health and UnitedHealth to acquire it. It has been reported in the Journal that bids are due around Labor Day.
Amazon’s (NASDAQ:AMZN) interest in Signify follows on the heels of its recent acquisitions of 1Life Healthcare, operator of the One Medical primary care practice, and iRobot, maker of the ubiquitous Roomba robotic vacuum, both of which were announced within the past few weeks. Amazon has been buying other companies for quite some time, but adding a new acquisition every few weeks could cause operational difficulties. A year into his tenure as CEO, Andy Jassy may be causing investors to worry that he is acquiring too many companies too quickly. Investors are aware that previous IT giants have fallen victim to bad transactions.
The Nasdaq dropped by two percent this morning, which may be a contributing factor to the stock’s decline. Concerns have been heightened by a recent survey that shows it will take the Fed at least two years to reduce inflation to its 2% objective, requiring the Fed to continue raising interest rates and the prospect of a recession.
What Should You Do Now
Signify’s market cap increased to $8.4 billion on news of Amazon’s (NASDAQ:AMZN) interest, so investors should keep a watch on the buyout. Amazon (NASDAQ:AMZN) is giant enough to afford to make a mistake with a costly acquisition. After spending $13.7 billion on acquiring Whole Foods, this may be the company’s most expensive purchase to date. Amazon paid $8.5 billion earlier this year to acquire the MGM film studio.
The acquisition of Signify is less of a gamble than some other transactions because of the company’s profitability. However, Amazon (NASDAQ:AMZN) is still betting on its ability to expand into the healthcare sector.
Featured Image : Megapixl © Yalcinsonat
Author Shariq Khan 
