Amazon’s stock has been undergoing a lot of changes recently in the wake of both Facebook’s privacy concerns and a highly visible attack by the current president. With as much going on as there is, Amazon may be a good buy for those looking to get in at lower prices. However, Amazon could also have a lot farther to fall.
Facebook, Amazon, Netflix, and Google — the four major tech stocks — all fell in the wake of Facebook’s Cambridge Analytica scandal. This scandal isn’t over; far from it. Facebook just suspended another data analytics firm after it was revealed that they were using similar tactics. This is important, as the initial data mining occurred in 2014. Other tech stocks have been mired in this among privacy concerns, in addition to new regulations that are making it more difficult for servicers of customer-made content.
Nevertheless, Amazon was not directly involved in these privacy scandals. Instead, Amazon’s primary value loss was related to comments made by President Donald Trump on Twitter, where he stated that Amazon was not paying enough in taxes, and indicated that he might do something about the situation.
“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon,” the president said. “That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned…[and that] does not include the Fake Washington Post, which is used as a ‘lobbyist’ and should so REGISTER. If the P.O. ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion.’ This Post Office scam must stop. Amazon must pay real costs (and taxes) now!”
Trump’s tweets appeared to imply that something might be done about Amazon’s use of the USPS system to subsidize their own business operations. As well, the president stated that Amazon does not pay taxes, though Amazon has begun to pay taxes on Internet sales over the last few years.
Amazon’s stock dropped 2.1% after the president’s Twitter remarks, falling a further 4.4% the following day. In total, the stock may have dropped as much as 8% based solely on the fears that the Trump administration might take some action against the company. However, the stock eventually rallied and closed with a gain. Though this might appear to be good news, it’s also indicative of investors who are worried about their future investments. Investors appear to be willing to cash out of Amazon’s stock as well as looking for good deals once Amazon’s stock falls.
It’s not known exactly what the president’s plans for Amazon are. What is known is that he has brought to light some issues, such as Amazon’s tax avoidance and the below market rates that they are currently paying for their postal and shipping services. In so doing, he has been able to shake some investor confidence in the stock. Meanwhile, Amazon CEO Jeff Bezos remains silent.
Whether or not Trump is serious about making changes that would alter Amazon’s financial landscape is uncertain. Though it appears that Trump does intend to take some form of action against Amazon, it’s doubtful that he would be able to. He may attempt to increase regulations surrounding the retail giant, but there is very little standing to do so. None of this impacts public perception of the brand, however, nor investor fear. If investors feel as though Amazon is under severe pressure from the president, further issues could arise.
And there’s another issue: Trump’s animosity for Amazon appears to come primarily from his dislike for the Washington Post, a company that he believes is a lobbyist for Amazon. With that in mind, it is possible that the presidential ire may be focused on a different subject entirely, and may not adversely impact Amazon itself.
Amazon’s stock has shown itself to be vulnerable to political machinations and, though it’s unlikely anything could be done to further regulate it, the threat is there. For buyers thinking long-term, this could lead to some good opportunities to catch Amazon stocks at low rates. For buyers who are short-term and low-risk, the rewards may not be there.