On January 6, we wrote an article called Amazon: One Tweet Away From Crashing. We argued that Amazon (NASDAQ:AMZN) was at constant risk of becoming President-elect Donald Trump's next political target. Some readers reacted very angrily saying that Donald Trump would be crazy to target a company like Amazon. We showed proof of several tweets and interviews where Donald Trump made Amazon a target during his campaign, and specifically of Jeff Bezos. We told investors not to short the stock as the stock was likely to make new all-time highs after the 4th quarter earnings.
In the comments section thereafter, we confirmed that we aren't bearish on shares of Amazon, but other than for Trump, we are bullish. We just recommended new investors on the sidelines to avoid the stock until we were sure Amazon was clear of political pressure. We will explain how Jeff Bezos made a preemptive move on Donald Trump, and how he effectively outsmarted him.
A short warning
We said last time that the right investment at the wrong time is the wrong investment. Take for example Microsoft (NASDAQ:MSFT) - people who bought the stock in 1999 took 14 years just to break even, even after dividends. Bill Gates was also praised back on its day the same way as Bezos. Microsoft has revolutionized our age. But in investing, it's all about timing.
Amazon is nothing short of revolutionary, and Jeff Bezos is in our opinion even more impressive than Bill Gates. But over the course of time, Amazon has had several 25% to 40% corrections. And those corrections sometimes take years to overcome. The best way to be a good trader is to not let your emotions cloud your judgement.
There is some good news for longs
We weren't alone on our sidelines view; on January 12th, the company announced plans to create more than 100,000 new, full-time jobs with benefits over the next 18 months in the U.S. Since the announcement, shares of Amazon have rallied an additional $27 to close at $817.14 on Friday, January 14th. This news is particularly encouraging since it seems that Jeff Bezos is one step ahead of the game. He knows that the current political environment is changing, and he is changing with it. The WSJ wrote the following article titled: Amazon Touts Job-Creation Plans, Patching Up Rift With Trump.
Jeff Bezos' Claims about American Jobs
The fact Jeff Bezos is making these announcements, and that the Trump transition team is taking credit for them, just proves that our theory was right to begin with. Here's Jeff Bezos' announcement as reported by the WSJ:
Innovation is one of our guiding principles at Amazon, and it's created hundreds of thousands of American jobs" - Jeff Bezos
A spokesman for Mr. Trump immediately took credit for the announcement:
The President-elect was pleased to have played a role in that decision by Amazon."
What Trump says matters
We aren't here to debate whether Donald Trump is sane or insane, but rather just to present the facts. Donald Trump so far has targeted Ford (NYSE:F), Carrier, General Motors (NYSE:GM), Toyota (NYSE:TM), Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), and most recently, the whole drug pricing industry. All of those stocks had reacted negatively to the comments made by Trump. As mentioned on the Wall Street Journal:
His public praising or shaming of corporations for their business decisions is pressuring them to stay in his good graces and to adjust their public-relations strategies."
We also recently wrote how the Mexican peso is on the verge of a panic, thanks to the new president-elect. Even Ford publicly acknowledged that, thanks to Trump, it decided to cancel a $1.4b investment in a Mexican manufacturing facility. Even possibly putting us on a path to repeal NAFTA that could send the economy into a shock. What nobody can disagree with is that when Trump speaks, people listen and the markets move.
A peace offering
Amazon mentioned in its press release that on top of the 10,000 veterans that it had already hired, it will hire an additional 25,000 over the next five years, and that its workforce will grow from 180,000 to 280,000 by mid-2018. Its press release went into great detail about how Amazon is all about job creation. It seems like a white flag or a peace offering.
Jeff Bezos has gained leverage
Jeff Bezos is nothing short of a genius, and a visionary. He understands change better than anybody. He would probably make a great stock trader as he seems to have no problem adapting to change. He knows that the political environment is changing, and by making the first move and promising to create an additional 100,000 jobs over the next 18 months, he has gained political leverage against Trump. Now any attack on Amazon would make Trump look bad and Jeff Bezos good. The press will quickly point out to how Amazon promised to create U.S. jobs. Now any policies against Amazon that threaten the jobs creation will make the blame fall on Trump.
Jeff Bezos Outsmarted Donald Trump
I think it's fair to say that Jeff Bezos has bought himself an insurance policy against political turmoil. This time, Jeff Bezos outsmarted Donald Trump by making the first move.
We expect shares of Amazon to reach new all-time highs after 4th quarter earnings. Long investors should rejoice the recent political moves made by Jeff Bezos. We will continue to update readers as developments occur. Again, we warn against taking a short position against the stock.
Disclosure: I am/we are long VRX, AGN, SGYP, CELG.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.