Amazon stock has long been a favorite of retail and institutional investors alike. While the stock’s performance has been exceptional over the past seven years, it is down more than 45% year to date.
Here is a quick roundup of what is happening at Amazon that both long-term and short-term investors need to be aware of, as they ask, should I buy at this price?.
Amazon’s stock price suffered dramatically in 2022 as the effects of the pandemic receded and people returned to the office for work. Inflation also hit consumers hard, right in the wallet, reducing discretionary spending. At least that’s the perception.
On July 8, 2021, Amazon’s stock was at an all-time high of $186.57. It then dropped to $95.50 as of December 1, 2022.
The drop in value is partly attributed to the overall hit the stock market took in 2022 as the Federal Reserve began a series of interest rate hikes while trying to cool down inflation. The markets reacted by selling off stocks that investors perceived to be overvalued or vulnerable to the effects of inflation.
Beyond that, the Amazon Alexa division has yet to perform as well as expected, adding another drag to Amazon’s stock value.
The company may not return to its pandemic stock price, but it’s a good stock to hold long-term as it offers conveniences few other retailers can match. Its Amazon Web Services power a large portion of the internet, small businesses and other enterprise platforms. AWS customers aren’t abandoning the platform due to poor reliability.
Amazon’s retail division does need to get a handle on its third-party sellers that sell defective and poor-quality goods. Aside from that, it’s managed to fill the hole that no other retailer has filled by shifting into web retailing.
Amazon revealed it would lay off 10,000 employees in the middle of November 2022. Most layoffs are in the devices division, retail, and human resources, with the Amazon Alexa division being chief among them.
It was revealed that the Amazon Alexa division was underperforming more than anticipated. Some reasons that led to the division being targeted for layoffs include low employee morale, failed attempts to monetize Alexa, and poor engagement from developers and users.
The total number of people laid off may reach 10,000 or more when all is said and done, but this number represents 3% of Amazon’s corporate workforce and less than 1% of its global workforce.
Amazon workers worldwide walked out during their shifts to protest Black Friday and stand for higher wages and better working conditions. The protests reportedly took place in over 30 countries.
In New York City, unions representing retail workers even staged a demonstration outside Jeff Bezos’ apartment building.
At issue are the working conditions inside Amazon’s warehouses, which tend to be unforgiving of human needs. The average hourly wage is seen as insufficient in contrast to the strenuous working conditions and metrics employees must meet lest they be fired for underperformance.
In the last two years, Amazon workers at five warehouses have participated in union elections, succeeding in one of the votes. Recently, another warehouse filed a petition for a vote as well. It is clear this trend will not be slowing and is something Amazon must deal with.
Amazon Prime has managed to snag significant box-office movies for streaming on the platform. They include titles such as:
It’s also premiering an original series with Alfred Molina titled “Three Pines,” an Italian-language series titled “The Bad Guy,” and “The Dr. Seuss Baking Challenge.”
Additionally, Amazon is reportedly investing up to $1 billion a year in new film releases and productions. The company will release these movies in traditional theater chains and through its Prime Video streaming service.
Mr. Bezos has announced he will give away his money to charity. Mr. Bezos intends to give away most of his $124 billion net worth throughout the rest of his life.
The primary recipients of his money will be organizations that fight climate change and work on bringing people together during social and political divisions.
Mr. Bezos stated in an interview that he and his partner, Lauren Sanchez, are building a foundation for giving away the money. The donations are called a Courage and Civility Award, a somewhat vague title.
To date, Mr. Bezos has awarded money to Jose Andres, a chef who provides disaster relief in the form of sustenance, and Van Jones, a CNN contributor who co-founded Dream Corps and Color of Change, both social and racial justice foundations.
Mr. Bezos’s most recent contribution was to Dolly Parton for $100 million.
Awards from the charity are given with no strings attached apart from a requirement to use the funds within ten years. The recipients are free to use the money in any way they see fit, something that’s mildly controversial.
Mr. Bezos is awarding the money in good faith and expecting the recipients to use the funds towards achieving the charity’s goals.
Of course, it’s not all bad news for Amazon. Amazon and PayPal agreed to a deal allowing shoppers to pay for items using their Venmo app. This will allow roughly 90 million people to pay another way for the things they buy on the e-commerce platform.
Amazon has continued to see large sales volume during its Prime Day events, with over 300 million items sold during this year’s event.
In addition, Amazon saw a record number of registrations for its Prime service after it agreed to a deal with the National Football League to exclusively stream “Thursday Night Football.”
Finally, Amazon also made an agreement with Hawaiian Airlines to lease ten cargo planes from the company to increase its retail distribution supply chain. This move allows Amazon to offer more goods for its Prime Delivery service and expand its same-day delivery service.
A lot is happening with Amazon’s stock, with the company’s future not as bright as it was before the year started. Investors should not be concerned that the company will be going out of business any time soon, but it will not be smooth sailing like it had been in previous years.
Amazon needs to take a hard look at its business units and tidy them up if it wants its stock price to reach record highs again.
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