6 ms·

Amazon Looking to Buy Capital One?

48 points by lefstathiou 10y ago

philiphodgen 10y ago
Dupe https://news.ycombinator.com/item?id=13662945 https://news.ycombinator.com/item?id=13662945
- dang 10y ago
  It doesn't count as a dupe if the post didn't get significant attention: https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html. HN allows a small number of reposts in such cases because good articles often need multiple cracks at the bat to get seen. I'm not sure this is a good article though. It seems to be nothing but a rumour.
  - notyourwork 10y ago
    What makes a rumor good or bad? This certainly isn't the first article on here that is speculation.
    - dang 10y ago
      Supporting evidence, I suppose?
EternalData 10y ago
Amazon, which has some very large amount of knowledge on your consumer spending habits if you use it regularly is now looking to get the complete financial picture for a not-so-insignificant percentage of the world. There's some powerful stuff you can do with that.
kevinstubbs 10y ago
Can somebody explain how Amazon could buy them if Capital One's total assests are worth $334 billion? Presumably the valuation would be some multiple of that. Amazon doesn't have enough liquid cash, so how would they do it?
- JacobJans 10y ago
  Capital One's current market cap is around $44 Billion. They may have $334 billion in assets, but its not their money. It's their customer's. By comparison, Amazon's market cap is around $400 billion. Ironically, they both seem to make around the same amount of money.
  - fny 10y ago
    Amazon heavily reinvests the money it makes, unlike Capital One, which pays dividends to shareholders quarterly.
- deleted 10y ago
  [deleted]
- geodel 10y ago
  I would imagine it is asset under management. May be something like hedge funds which have 100s billion dollar assets but that is money of clients not the value of hedge fund.
- antimora 10y ago
  Probably a combination of asset merging and cash pay out.
- GauntletWizard 10y ago
  You've raised like five questions in three sentences, so here's the low down: Capital One isn't worth $334B. It manages assets worth $334B. Those are the totals of the deposits creditors have with it. Capital One is worth $44B as of this writing[1]. Many companies have fixed capital assets worth less than the company, because they've financed those assets with debt, which would have to be acquired or repaid at the time of the company's sale. Some companies have close to no fixed assets but are worth much from their prestige or ability to execute. Some companies have secondary liabilities that are worth much more than their assets - See Yahoo, who were at one point worth less than the valuation of their holding in Alibaba. Buyouts are rarely done in cash. They're often done in financing, with several banks lending money to the company to cover the total purchase price. They're also frequently done in stock, where the buying company gives the acquired company shares in the buyer equal to the value of the acquired - Either by issuing new stock, or by simply buying up the old, or some combination of the two. [1]https://www.google.com/finance?q=NYSE:COF https://www.google.com/finance?q=NYSE:COF
tboyd47 10y ago
> Regulators in the US are taking interest in the large sums collectively kept on stored value cards and the associated mobile apps. “The money stored on these cards – and any similar stored value accounts – are effectively the same as bank deposits and as the total value now exceeds the deposits at smaller US banks, regulators are seeing a need to apply oversight,” O’Brien says. What exactly are these "stored value cards" with associated mobile apps? Things like gift cards? Or are they talking about Apple and Android Pay?
- josephst18 10y ago
  Perhaps they mean apps like Square Cash or Venmo? Both of those hold money for users in a "virtual" account until the user chooses to move it into a real banking account.
- bigtunacan 10y ago
  It sounds like they are talking about gift cards, gift card apps, and alternative payment apps. These days that's probably a very large umbrella. Everything from a Google Play or iTunes app to apps like BlendCard, Gyft, Dwolla, Venmo, Square Cash, etc... would likely fall into this. Depending on how PayPal is structured any funds you have sitting in a PayPal account could also fall under this umbrella; which that alone is probably a significant number these days.
- chiph 10y ago
  Until they recently (and abruptly) closed, I had a house account at MyFitFoods. You put $500 on their house account and got a $25 bonus, and was able to make food purchases from it. When it ran low you could top it up. A similar comparison would be prepaid cellular phone service. You put money on the account and draw on it by making calls.
thedevil 10y ago
Amazon's business model is based on great service to customers at a low price. Capital One's business (edit: their credit card business) is based on screwing consumers for as much money as they can legally (another edit: my impression is based on anecdotes from many years ago, before the ING acquisition). Those aren't very compatible business models. If Amazon wants a bank, there's probably a lot of options with better synergies.
- astrange 10y ago
  > Capital One's business is based on screwing consumers for as much money as they can legally. Harsh words for someone who runs a bank with no overdraft fees! I always thought their business model was giving people with starter credit (like college students) credit cards and car loans.
  - thedevil 10y ago
    > I always thought their business model was giving people with starter credit (like college students) credit cards and car loans. This is what I've seen of them. They offer college students (who don't know better) really bad credit card deals with high fees and high rates and sneaky "gotcha" contract terms. Although I may be overly harsh since my impressions of them are all based on their credit cards. For all I know, their other banking services are ethical. Also to be fair: by the time Capital One acquired ING, I was too old to know many college students so my anecdotes were all from before then.
    - keehun 10y ago
      After using TCF Bank (Minnesota) and Wells Fargo (both are trash), Capital One has been amazing to me. I've never had any problems with Capital One. I began as an ING 360 customer (which was lightyears better than C1...) and stuck through the transition and never had any issues. Also use their credit cards. I never got the impression that they were predators.
    - _nothing 10y ago
      My first credit card in college was from Capital One. I personally thought they were great. They gave me my cashback rewards right away instead of quarterly, and the one time I forgot to make a payment on time (before I set up autopay), they forgave it and initiated the payment over the phone. After that I just never carried a balance and never had to worry about their fees and rates. Also never ran into any "gotchas".
motivic 10y ago
I work for Capital One, and this is almost surely pure speculation. I wouldn't even call it rumor because there is no trace of evidence to this speculation. I say put your skeptics head on if the title of the article ends in a question mark (and also sources cited do not directly discuss the matter at hand).
- timdavila 10y ago
  "Any headline that ends in a question mark can be answered by the word no." - Betteridge https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines
  - motivic 10y ago
    If only I'm as opinionated and eloquent.
  - aub3bhat 10y ago
    Any journalist who dares to ask a question is wrong.
- late2part 10y ago
  How about a wager? My first wager is that you're not in a position to know if it's being discussed. My second wager is that it happens. For starters I'll bet you $100 with 40:1 odds that it does happen. Happen defined as "Both parties announce intentions to merger/acquire within 6 months from today."
  - sokoloff 10y ago
    Are you laying or taking the 40:1. If you're laying the 40:1, I'm in, of course!
    - late2part 10y ago
      I get $4k if it does, I pay $100 if it doesn't (by 6 months end).
jonknee 10y ago
> Regulators in the US are taking interest in the large sums collectively kept on stored value cards and the associated mobile apps. “The money stored on these cards – and any similar stored value accounts – are effectively the same as bank deposits and as the total value now exceeds the deposits at smaller US banks, regulators are seeing a need to apply oversight,” O’Brien says. There is zero chance the new administration is going to make new regulations that are unfriendly to financial institutions.
- nickff 10y ago
  I am not a fan of the new administration, FTC, CFPB, or even FDIC, but all regulations have disparate impacts on banks depending on their size and structure. The large banks have benefited from recent complicated and nebulous regulations with high compliance costs. Re-regulation is why the too-big-to-fail banks have gotten bigger. Deregulation would benefit smaller banks, and harm the larger ones.
  - cle 10y ago
    I guarantee that big banks will be involved in any deregulation, and will be working to steer it in their favor for competitive advantage. It happens with any change, whether it's adding regulation, re-regulation, or deregulation.
ryanmarsh 10y ago
Amazon would ruin the good culture growing at capital one.
- notyourwork 10y ago
  Implying what exactly?

48 points by lefstathiou 10y ago

philiphodgen 10y ago

Dupe https://news.ycombinator.com/item?id=13662945 https://news.ycombinator.com/item?id=13662945

dang 10y ago
It doesn't count as a dupe if the post didn't get significant attention: https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html. HN allows a small number of reposts in such cases because good articles often need multiple cracks at the bat to get seen. I'm not sure this is a good article though. It seems to be nothing but a rumour.
- notyourwork 10y ago
  What makes a rumor good or bad? This certainly isn't the first article on here that is speculation.
  - dang 10y ago
    Supporting evidence, I suppose?

EternalData 10y ago

Amazon, which has some very large amount of knowledge on your consumer spending habits if you use it regularly is now looking to get the complete financial picture for a not-so-insignificant percentage of the world. There's some powerful stuff you can do with that.

kevinstubbs 10y ago

Can somebody explain how Amazon could buy them if Capital One's total assests are worth $334 billion? Presumably the valuation would be some multiple of that. Amazon doesn't have enough liquid cash, so how would they do it?

JacobJans 10y ago
Capital One's current market cap is around $44 Billion. They may have $334 billion in assets, but its not their money. It's their customer's. By comparison, Amazon's market cap is around $400 billion. Ironically, they both seem to make around the same amount of money.
- fny 10y ago
  Amazon heavily reinvests the money it makes, unlike Capital One, which pays dividends to shareholders quarterly.
deleted 10y ago
[deleted]
geodel 10y ago
I would imagine it is asset under management. May be something like hedge funds which have 100s billion dollar assets but that is money of clients not the value of hedge fund.
antimora 10y ago
Probably a combination of asset merging and cash pay out.
GauntletWizard 10y ago
You've raised like five questions in three sentences, so here's the low down: Capital One isn't worth $334B. It manages assets worth $334B. Those are the totals of the deposits creditors have with it. Capital One is worth $44B as of this writing[1]. Many companies have fixed capital assets worth less than the company, because they've financed those assets with debt, which would have to be acquired or repaid at the time of the company's sale. Some companies have close to no fixed assets but are worth much from their prestige or ability to execute. Some companies have secondary liabilities that are worth much more than their assets - See Yahoo, who were at one point worth less than the valuation of their holding in Alibaba. Buyouts are rarely done in cash. They're often done in financing, with several banks lending money to the company to cover the total purchase price. They're also frequently done in stock, where the buying company gives the acquired company shares in the buyer equal to the value of the acquired - Either by issuing new stock, or by simply buying up the old, or some combination of the two. [1]https://www.google.com/finance?q=NYSE:COF https://www.google.com/finance?q=NYSE:COF

tboyd47 10y ago

> Regulators in the US are taking interest in the large sums collectively kept on stored value cards and the associated mobile apps. “The money stored on these cards – and any similar stored value accounts – are effectively the same as bank deposits and as the total value now exceeds the deposits at smaller US banks, regulators are seeing a need to apply oversight,” O’Brien says. What exactly are these "stored value cards" with associated mobile apps? Things like gift cards? Or are they talking about Apple and Android Pay?

josephst18 10y ago
Perhaps they mean apps like Square Cash or Venmo? Both of those hold money for users in a "virtual" account until the user chooses to move it into a real banking account.
bigtunacan 10y ago
It sounds like they are talking about gift cards, gift card apps, and alternative payment apps. These days that's probably a very large umbrella. Everything from a Google Play or iTunes app to apps like BlendCard, Gyft, Dwolla, Venmo, Square Cash, etc... would likely fall into this. Depending on how PayPal is structured any funds you have sitting in a PayPal account could also fall under this umbrella; which that alone is probably a significant number these days.
chiph 10y ago
Until they recently (and abruptly) closed, I had a house account at MyFitFoods. You put $500 on their house account and got a $25 bonus, and was able to make food purchases from it. When it ran low you could top it up. A similar comparison would be prepaid cellular phone service. You put money on the account and draw on it by making calls.

thedevil 10y ago

Amazon's business model is based on great service to customers at a low price. Capital One's business (edit: their credit card business) is based on screwing consumers for as much money as they can legally (another edit: my impression is based on anecdotes from many years ago, before the ING acquisition). Those aren't very compatible business models. If Amazon wants a bank, there's probably a lot of options with better synergies.

astrange 10y ago
> Capital One's business is based on screwing consumers for as much money as they can legally. Harsh words for someone who runs a bank with no overdraft fees! I always thought their business model was giving people with starter credit (like college students) credit cards and car loans.
- thedevil 10y ago
  > I always thought their business model was giving people with starter credit (like college students) credit cards and car loans. This is what I've seen of them. They offer college students (who don't know better) really bad credit card deals with high fees and high rates and sneaky "gotcha" contract terms. Although I may be overly harsh since my impressions of them are all based on their credit cards. For all I know, their other banking services are ethical. Also to be fair: by the time Capital One acquired ING, I was too old to know many college students so my anecdotes were all from before then.
  - keehun 10y ago
    After using TCF Bank (Minnesota) and Wells Fargo (both are trash), Capital One has been amazing to me. I've never had any problems with Capital One. I began as an ING 360 customer (which was lightyears better than C1...) and stuck through the transition and never had any issues. Also use their credit cards. I never got the impression that they were predators.
  - _nothing 10y ago
    My first credit card in college was from Capital One. I personally thought they were great. They gave me my cashback rewards right away instead of quarterly, and the one time I forgot to make a payment on time (before I set up autopay), they forgave it and initiated the payment over the phone. After that I just never carried a balance and never had to worry about their fees and rates. Also never ran into any "gotchas".

motivic 10y ago

I work for Capital One, and this is almost surely pure speculation. I wouldn't even call it rumor because there is no trace of evidence to this speculation. I say put your skeptics head on if the title of the article ends in a question mark (and also sources cited do not directly discuss the matter at hand).

timdavila 10y ago
"Any headline that ends in a question mark can be answered by the word no." - Betteridge https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines
- motivic 10y ago
  If only I'm as opinionated and eloquent.
- aub3bhat 10y ago
  Any journalist who dares to ask a question is wrong.
late2part 10y ago
How about a wager? My first wager is that you're not in a position to know if it's being discussed. My second wager is that it happens. For starters I'll bet you $100 with 40:1 odds that it does happen. Happen defined as "Both parties announce intentions to merger/acquire within 6 months from today."
- sokoloff 10y ago
  Are you laying or taking the 40:1. If you're laying the 40:1, I'm in, of course!
  - late2part 10y ago
    I get $4k if it does, I pay $100 if it doesn't (by 6 months end).

jonknee 10y ago

> Regulators in the US are taking interest in the large sums collectively kept on stored value cards and the associated mobile apps. “The money stored on these cards – and any similar stored value accounts – are effectively the same as bank deposits and as the total value now exceeds the deposits at smaller US banks, regulators are seeing a need to apply oversight,” O’Brien says. There is zero chance the new administration is going to make new regulations that are unfriendly to financial institutions.

nickff 10y ago
I am not a fan of the new administration, FTC, CFPB, or even FDIC, but all regulations have disparate impacts on banks depending on their size and structure. The large banks have benefited from recent complicated and nebulous regulations with high compliance costs. Re-regulation is why the too-big-to-fail banks have gotten bigger. Deregulation would benefit smaller banks, and harm the larger ones.
- cle 10y ago
  I guarantee that big banks will be involved in any deregulation, and will be working to steer it in their favor for competitive advantage. It happens with any change, whether it's adding regulation, re-regulation, or deregulation.

ryanmarsh 10y ago

Amazon would ruin the good culture growing at capital one.

notyourwork 10y ago
Implying what exactly?