• 14 hours 2021 Could Be A Huge Year For Chinese Stocks
  • 2 days Shadowy Brokers Target Easy TikTok Money In New Scheme
  • 3 days Cannabis Sales Are Soaring In The United States
  • 4 days Biden Will Be A Boon For Solar Stocks
  • 5 days The Shroom Boom Is Here To Stay
  • 8 days The Gold Rally Has Finally Run Out Of Steam
  • 8 days Citibank Analyst Predicts $300k Bitcoin By End Of 2021
  • 11 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 11 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 13 days Why 12 Million American Millionaires Isn’t Good News
  • 14 days Big Oil Is Paying The Price For Investing In Renewables
  • 15 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 16 days Did Amazon Just Democratize Prescription Drugs?
  • 17 days The Private Space Race Just Got Very Real
  • 19 days Short Sellers Are Willing Big In This Turbulent Market
  • 20 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 21 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 22 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 23 days Black Friday Could Be Retailers’ Only Hope
  • 24 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
Why You Should Not Dump Your Stay At Home Stocks Just Yet

Why You Should Not Dump Your Stay At Home Stocks Just Yet

Despite the euphoria surrounding the…

McAfee Arrested In Spain On Tax Evasion Charges

McAfee Arrested In Spain On Tax Evasion Charges

A controversial businessman and anti-virus…

Holiday Spending Already Soaring Amid Pandemic

Holiday Spending Already Soaring Amid Pandemic

As retailers encourage customers to…

  1. Home
  2. News
  3. Breaking News

Trump Targets Amazon As Tech-Sell Off Continues

Trump

President Trump has never shied away from making public his deep-seated antipathy towards Amazon, and now he’s upping the stakes in his battle against what he views as unfair tax practices and antitrust violation.

And his Thursday-morning tweet managed to shave another 2 percent off Amazon’s share price in the pre-market, when it’s already lost tens of billions in market value as a result of Trump’s offensive.

(Click to enlarge)

Amazon stock has now joined a group of beleaguered FANG stocks in the ongoing tech sell-off, all thanks to fears that the president might be about to fire new shots at the company.

Amazon stock has lost more than $53 billion in market value after reports that the president is ''obsessed'' with clipping the company's wings, though of course it's unlikely that the latest sell-off is what he had in mind. This is not, however, an administration obsessed with consequences.

Amazon's sell-off perhaps represents the biggest loss in value by any single stock that can be directly pinned on Trump's words or actions.

Defense contractor Lockheed Martin (NYSE:LMT) famously lost $4 billion in 2016 after Trump tweeted that the company's F-35 program was too expensive.

Destroying small retailers

According to political news site Axios, the president's beef with Amazon is informed by what he sees as the company's role in putting small retailers out of business, as well as the preferential treatment it has been receiving from the UPS.

The report says that Trump has been exploring various ways that his administration can use anti-trust or competition laws to limit Amazon's dominance. Related: Elon Musk’s $2.6 Billion Tesla Challenge

His overall logic might be flawed, but there is an elephant in this room.  

Amazon has perfected the art of aggressive pricing--something that has literally sucked the life out of competing physical retailers.

There's ample evidence to show that Amazon has in fact been growing at the expense of brick-and-mortar retailers. Big-box retailers such as Wal-Mart, Best Buy, Home Depot, Target and even Costco have seen their growth shrink in categories where they compete directly with Amazon.

Meanwhile, Amazon's share of the retail pie has been steadily expanding.

(Click to enlarge)

Source: CNBC

FANG stocks vs. Capitol Hill

Investors have also been using Facebook as a punching bag lately, bidding down the company's shares 17% over the past 30 days. Amazon and Facebook belong to the famous FANG stocks along with Netflix and Google.

Once seen as a monolith of performance, FANG stocks have lately undergone various degrees of decoupling and have been underperforming the broader tech sector.

FANG ETF vs (XLK) Tech Sector ETF YTD Returns

(Click to enlarge)

Source: CNN Money

All this boils down to fears that Capitol Hill will increasingly clamp down hard on these tech giants by introducing tough regulations that will affect the way they do business in the future.

In the case of Amazon, Congress might pass new laws that will force all online companies to collect sales taxes. The online retail giant already does that in all states, though it still remains vulnerable to new laws because in most states it doesn’t collect sales taxes on sales of goods sold by third parties on its platform, according to the New York Times.

Where it concerns Amazon's dominance, there just isn't too much room for the government to maneuver because anti-trust laws have shifted dramatically since the 1980s when they were primarily meant to breakup huge companies like Amazon.

Modern anti-trust laws tend to focus more on consumer welfare than sheer company size. A case could be made on Amazon's price discrimination and predatory pricing practices; but the fact that low prices have made things easier for its customers would be hard to argue against.

By Fred Dunkley for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment