Amazon’s potential acquisition of Shopify

Abstract

The thesis explores Amazon.com Inc.'s possible acquisition of Shopify Inc., focusing on valuation methodologies and the strategic basis of the transaction. The paper is motivated by increasing consolidation within the e-commerce and technology sectors, where scale, data integration, and platform synergies are at the forefront of competitive advantage. The valuation starts by valuing Shopify on a stand-alone basis using intrinsic and market-based methodologies. Discounted Cash Flow (DCF) valuations make use of a perpetual Blume- adjusted Weighted Average Cost of Capital (WACC) of 12.53%, substantiated by exit multiple and perpetuity growth models. Market-based valuation includes trading comparables and precedent transactions. Results demonstrate wide dispersion: conservative valuations under perpetual growth models are contrasted with more optimistic valuations implied by transaction premiums and market sentiment. A synergy-adjusted case is then constructed, forecasting potential revenue enhancements and cost savings achievable under Amazon ownership. These cash flows are discounted at the same 12.53% WACC to ensure the incremental uplift captures higher free cash flow generation and not double-counted risk reductions. A Football Field analysis integrates all methods, illustrating valuation corridors with and without synergies, benchmarked against Shopify's market capitalization. Findings are that, while Shopify's independent valuation is stretched relative to fundamentals, Amazon's strategic rationale would be in unlocking synergies to warrant a disciplined premium. A transaction, then, might be value-accretive for Amazon if executed within a narrow price band and under integration discipline, though governance arrangements and founder control at Shopify remain material hurdles.

Date of Award	13 Oct 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	António Borges de Assunção (Supervisor)