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Amazon Is Doing Too Well

Jul. 17, 2017 12:59 PM ETAmazon.com, Inc. (AMZN)106 Comments
David Butler profile picture
David Butler


  • With Amazon's triumphant run in the retail sector, lawmakers are beginning to question its business practices.
  • Retail is suffering massive job losses in the wake of the company's automated business model.
  • If the chatter over regulatory moves comes to fruition, Amazon's bloated stock price could have some downside ahead.

Overplaying its hand

Amazon's (NASDAQ:AMZN) rise has been prolific. The company did the same thing that every other successful business has done in the past. It just did it online. It made the consumer's life easier, and sometimes cheaper. By essentially being a "middle man" brokering the sale of goods between producers and consumers (much like Wal-Mart (WMT)), Amazon has increased our ability to "shop around." In five minutes you can look through a whole host of golf shirts, televisions, etc. It also gives access to products you might not ordinarily see.

A small novelty brand that makes customizable t-shirts in Oregon might not have found a lot of customers in, say, Maine prior to the advent of online shopping. Now, they can get their products on Amazon and gain exposure to anyone with a computer. Cheap knock-off brands can get a little slice of Nike's (NKE) pie because you see the pricing comparisons right on screen. The company also tapped into the simple fact that people are lazy and don't want to go to the store if they don't have to. The simplicity of the concept is genius.

Recently, there has been much more chatter about the monopolistic potential of Amazon's format. It has bothered me for years. I buy very little from Amazon because it hurts jobs. The company has been making acquisitions/corporate moves that are scaring competitors. Its bid for Whole Foods (WFM) has lawmakers questioning whether the company's rising dominance is healthy for the consumer. House Rep. David Cicilline has requested a hearing on the merger and the economic consequences for the grocer industry. This seems to be the first of many discussions on Amazon's antitrust potential.

Prices vs. Jobs

The case is there for federal moves on Amazon. When you look at what it has done

This article was written by

David Butler profile picture
Bit of a stock nerd. Contributor for SeekingAlpha and Jim Cramer's Real Money. I like earnings, and have very little time for chart analysis. It doesn't matter how many squiggles a chart has if the company doesn't drive meaningful earnings per share.

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