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Bold 2019 Predictions For Amazon, Apple, Snap, Tesla In Acquisitions

Most industry watchers play it safe with year-ahead forecasts. They simply extrapolate from current trends to forecast what will happen in the new year. The same holds for 2019 predictions.

Others like to make bold — some might say crazy — prognostications for the year-ahead. They focus on unexpected events like mergers and acquisitions. Of course, they are usually wrong. But the speculation is still a fun exercise.

What follows is a roundup of some of the most audacious 2019 predictions for the tech industry.

Apple Buys Tesla

Every December in recent years, some pundit inevitably guesses that consumer electronics giant Apple (AAPL) will buy electric-car maker Tesla (TSLA).

Such a deal seems to make sense. After all, both are high-end brands with devoted customers. Apple is developing technology for autonomous electric vehicles and is looking for its next big thing as iPhone sales slow. Plus, Tesla has investments in solar energy, which Apple supports through its renewable energy initiatives.

As part of its annual "outrageous predictions," Saxo Bank recently forecast that Apple will buy Tesla in 2019.

Peter Garnry, head of equity strategy at Saxo Bank, predicted that Apple will offer $520 a share for Tesla. The acquisition will help Apple broaden its product ecosystem and give Tesla the capital it needs to realize its potential, he said in a blog post.

Deal Makes 'Perfect Sense'

"The acquisition makes perfect sense," Garnry said. "It's small enough to be an all-cash deal and it only represents 12 months of Apple's free cash flow. The two companies are both focused on engineering and design in hardware coupled with vertically integrated distribution models in high-fashion areas. Apple has the financial strength to fulfill Elon Musk's wildest dreams, ensuring that Tesla does not have to balance capital expenditures to cash flow generation in the short term."

Luke Lango, portfolio manager with L&F Capital Management, also predicted this month that Apple will buy Tesla.

"If Apple wants to reinvigorate growth, and put some of its massive cash balance to use beyond buybacks and dividends, then buying Tesla — a company with similar branding — could be a smart move," he said in a Dec. 10 article on InvestorPlace.

Factors against a deal include Apple's reluctance to do large, transformative mergers. Tesla Chief Executive Elon Musk also is not likely to want to give up control of his company just as it's ramping up production of its mass-market Model 3 vehicle, Lango said.

Apple Forges Partnership With Tesla

In a report earlier this week, Wedbush Securities analyst Daniel Ives suggested that Apple form a strategic partnership with Tesla. He floated the idea in his "Top 10 Christmas Wish List for Apple Investors in 2019."

"We still believe a partnership with Tesla is the more likely path rather than the much-discussed acquisition scenario between Apple/Tesla — although that still remains a wild card over the coming years," Ives said.

A tie-up with Tesla would give Apple access to the huge electric vehicle market, he said.

Apple Buys Sony Pictures

Some analysts think Apple will buy a movie or television studio to bulk up its video content for a streaming video service expected to launch in 2019.

Ives said he thinks Apple will buy an independent movie studio like A24 to gain access to high-quality content.

Variety magazine thinks Apple will use some of its cash stockpile, which totaled $237 billion at the end of September, to buy Sony's (SNE) movie studio, Sony Pictures.

"The Silicon Valley giant will finally recognize it could use some Hollywood expertise as it tries to catch up with Netflix's (NFLX) and Amazon's (AMZN) streaming services," Variety said in its 2019 predictions. "Buying Sony gives Apple access to a library that includes 'Men in Black,' 'Breaking Bad' and 'Jumanji,' as well as the right to make more 'Spider-Man' movies. That's a web Apple would be lucky to spin."

Amazon Buys Target

Speaking of Amazon, several analysts think the e-commerce giant will expand its physical retail presence in 2019 through a big acquisition. Such a deal would be a follow-up to its August 2017 purchase of Whole Foods Market.

Loup Ventures reiterated its prediction from a year ago that Amazon will buy department store chain Target (TGT).

"We were wrong in predicting Amazon would acquire Target in 2018," the venture capital firm said in a blog post. "It was the boldest of our eight predictions for the year, and it was incorrect. However, we continue to believe the combination makes sense because Amazon needs to acquire a Target-like footprint (1,800 stores) in order to continue growing its retail presence."

L&F Capital's Lango said he also believes Amazon will buy Target.

"Much like Whole Foods, Target's underlying demographic of largely middle- to upper-income shoppers has heavy overlap with the Amazon Prime user base, so this acquisition would be yet another opportunity for Amazon to grow its share of wallet among its core demographic," Lango said. "This would recharge e-commerce growth (Target is growing its digital business at a near 50% rate) and reduce competition."

Amazon Buys Kohl's

Meanwhile, Brian Sozzi, editor-at-large for Yahoo Finance, thinks Amazon will buy Kohl's (KSS).

He noted that Kohl's has Amazon product return areas in 100 stores. This has helped bring in people who otherwise would not have visited Kohl's stores, Sozzi said.

Also, earlier this year Kohl's launched a test of selling groceries in 10 stores in partnership with discounter Aldi.

"In light of these efforts, Kohl's realizes it could transform department store retailing by selling out to Amazon," Sozzi said in an article. "Kohl's CEO Michelle Gass knows well the power of Amazon — she worked in Seattle (Amazon's home) for years at Starbucks (SBUX) and attended the University of Washington. Get ready for Whole Foods Express stores inside your local Kohl's. Sorry, Aldi."

Amazon Spins Off Amazon Web Services

Scott Galloway, a professor at New York University's Stern School of Business, thinks Amazon will spin off its cloud computing business, Amazon Web Services, into a separate, publicly traded company in 2019.

Amazon will make the move as a self-imposed response to growing calls for regulation, he told Business Insider. AWS could see a valuation of anywhere from $70 billion to $600 billion, he said.

Snap Gets Acquired, Probably By Amazon

Galloway also predicted that Snapchat maker Snap (SNAP) will be an acquisition target in 2019.

"Snap needs something," he told Recode.

"I believe this company is going out of business," Galloway said, "Snap will not be an independent company by the end of 2019."

He sees only two potential buyers for Snap: Amazon and Alphabet (GOOGL)-owned Google.

Amazon, which launched a commerce-focused partnership with Snap this fall, makes more sense, he said.

"I think (Amazon CEO Jeff) Bezos says, 'All right, you have a core constituency that buys stuff and buys stuff irrationally,' " Galloway said. "We love teenagers because they're stupid, because they spend all their money.'"

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