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Is the price of Amazon´s shares endangered?

13 Apr 2018,

This year, the Amazon shares are pulling up the stock markets in the US. Since the beginning of the year they have grown by 23%. In the last 12 months they have grown by more than 60%. The company is growing and supressing the competition. What is currently the biggest risk? The way of supressing its competition. This is why even President Donald Trump has entered the fight against Amazon.

Donald Trump in hisfight against Amazon

I quote two of his recent tweets:

I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.) and are putting many thousands of retailers out of business!… This Post Office scam must stop. Amazon must pay real costs (and taxes) now!

Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country… not a level playing field!

In both, he clearly stands out his position against Amazon and their business model. According to him, Amazon severely damages other taxable businesses. In the case of Amazon, however, it is not a question of avoiding taxes due to foreign structures. Amazon’s minimum tax has been paid due to the small profit reported since all the funds have been invested for many years in their development, new products, etc. This makes Amazon´s position.

Investors are aware of this investment policy with minimized profits, and so Amazon shares are traded at P / E around 300, although P / S is 3.8.

Donald Trump and his attitude to J. Bezos

However, Donald Trump goes against J. Bezos personally. J. Bezos owns The Washington Post, a newspaper that strongly opposes Trump’s policy. It is possible that Trump will start promoting antitrust legislation to limit Amazon’s influence on the US economy.

The speed of enforcing something like this is of course unknown. But even if this has not been enforced yet, it is an important signal sent especially towards other FAANG companies (Facebook, Apple, Netflix and Google). Trump’s other statements in this area may influence the share prices of these companies.

Invest rationally!

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