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Tags: amazon | stock | threats | price | cyber security | regulation

3 Biggest Threats to Amazon Stock

amazon corporate logo symbol amid backdrop of us american dollars

By    |   Tuesday, 11 December 2018 09:47 AM EST

To its biggest fans and admirers, Amazon.com Inc. can do little wrong.

The online retailing giant intimidates any industry it thinks about entering. The Seattle company’s sales have seemingly become the economic benchmark for the holiday shopping season.

InvestorPlace Media’s Tom Taulli recently examined three possible vulnerabilities facing Amazon (AMZN):

'Managerial Bandwidth'

Amazon CEO Jeff Bezos “somehow has been able to span multiple diverse industries, which have fierce competitive dynamics,” the report said. “At some point, it seems inevitable that there will be major mistakes and mishaps,” it explained.

As noted in the most recent 10-K for AMZN:

"We are rapidly and significantly expanding our global operations, including increasing our product and service offerings and scaling our infrastructure to support our retail and services businesses. This expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results."


InvestorPlace explained that Amazon is a sitting duck for hackers. The company stores hundreds of millions of credit cards as well as sensitive purchase data. “If there was a material hack of AMZN, it would be a game changer - and likely mean a hit to Amazon's stock price (AMZN) as well,” the report said,

Government Regulation

President Donald Trump has long been a critic of Amazon, citing antitrust issues and taxes.

“So is this mostly bluster? Or could there be real problems with potential regulation? There are risks - and they may not just be from the U.S. Europe is another area where there are land mines. The fact is that AMZN is becoming a major power and this can lead to a backlash,” the report said.

“AMZN has taken steps to head off potential liability. An example is the raising of its minimum wage to $15 an hour. Even though this helped mute the criticisms against Amazon, it will certainly not be cheap. The move will likely weigh on margins, and eventually Amazon stock.”

The Trump administration has recommended the U.S. Postal Service raise prices for shipping packages, a move that would hit online retailers such as Amazon, Bloomberg reported.

A Trump-appointed commission recently released recommendations for the rate increase, which an administration official said would affect most commercial shippers. The report didn’t say how much the Postal Service should increase its prices.

Trump appointed the commission after months of intermittent threats and insults against Amazon and the Washington Post, which is owned by Jeff Bezos, the retail giant’s founder and chief executive. Trump has accused Amazon of contributing to the Postal Service’s financial losses through shipping deals the president claims are unprofitable. Postal Service representatives have said their confidential shipping agreement with Amazon is profitable.

Although the Postal Service can’t legally deliver packages for less than its delivery costs, Trump has claimed that Amazon was “costing the United States Post Office massive amounts of money for being their Delivery Boy,” a situation that puts “many thousands of retailers out of business.”

Meanwhile, Amazon.com briefly became the most valuable company on Wall Street in intraday trade early last week, days after Microsoft Corp. dethroned long-time leader Apple Inc., Reuters reported.

© 2024 Newsmax Finance. All rights reserved.

To its biggest fans and admirers, Amazon.com Inc. can do little wrong.
amazon, stock, threats, price, cyber security, regulation
Tuesday, 11 December 2018 09:47 AM
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