How Trump Could Hurt Amazon.com, Inc. Stock

Trump is likely to take actions that will hurt Amazon stock

Amazon.com: The Lilliputians Have Landed

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In August, I predicted that President Trump would target Amazon.com, Inc. (NASDAQ:AMZN) and urged investors to dump Amazon stock. I simply believed that The Washington Post, owned by Amazon CEO Jeff Bezos, had published too many stories that hurt Trump’s administration, and that Trump would seek to retaliate by harming Amazon.

Moreover, as I noted in the August column, Trump had promised during the campaign that the e-commerce giant would “have problems” if he became president.

Of course, the president’s recent negative tweets about AMZN have caused the price of Amazon stock to decline. But I think that the president will look to take further, concrete action against the company.

One reason for my belief is that, as president, Trump has generally kept many of his promises or at least tried to do so. For example, he promised to build a border wall, destroy Obamacare and significantly increase defense spending, and he has done or tried to do all of those things.

Politico recently compiled a list of actions Trump could take against AMZN, but somehow left out two obvious steps that the administration could take. In my previous column, I noted that the Federal Trade Commission, or FTC, was investigating the company for allegedly misleading its customers about price discounts. And I pointed out that “the government is probing the e-commerce giant for possibly violating the sanctions that Washington has leveled against Iran.

The Trump administration could find Amazon guilty on both counts. In such an event, Amazon’s reputation would at least suffer a bit, particularly with pro-Trump, anti-Iran consumers and changes to its discount policies could hurt its sales.

As for some of the other possibilities listed by Politico, I think it will be difficult for Trump to hurt AMZN using the Postal Service or deny the company the major Department of Defense cloud contract discussed by Politico.

As Politico pointed out, “the current postmaster general and deputy postmaster general are Obama-era holdovers, and the Postal Service’s board of governors has been vacant since Trump took office,” while any moves by Trump to appoint permanent postal service leaders would have to be approved by the Senate, where a majority of members are anti-Trump (a few Republican senators, including Jeff  Flake and Bob Corker, do not like Trump).

And Defense Secretary Jim Mattis seems like an independent operator who does not take orders from the president, judging by his willingness to publicly differ with Trump on key issues such as the Iran Deal.

Bottom Line on Amazon Stock

However, the president could conceivably use the Federal Vacancies Act to temporarily appoint as acting postmaster general, without Senate confirmation, someone who has been confirmed by the Senate for another position. That person could then raise the rates that Amazon pays the post office. Alternatively, pro-Trump members of Congress could conceivably successfully place a provision mandating higher postal rates for Amazon into a large, must-pass bill.

Additionally, it’s possible that pro-Trump Republican members of Congress and pro-tax Democratic members of Congress could team up to impose new taxes on e-commerce. And, as Politico pointed out, pro-Trump state attorneys general could launch investigations of Amazon.

Given Trump’s history of following through on his promises, I believe that the president will look to take action against Amazon. After the administration does take action against Amazon, investors will worry that the government could take additional steps against the e-commerce giant.

As a result, Amazon stock is likely to remain, at best, range-bound during the duration of Trump’s presidency. Therefore, I would advise against holding Amazon stock as long as Trump remains president.

As of this writing, Larry Ramer did not own shares of any of the aforementioned companies. 


Article printed from InvestorPlace Media, https://investorplace.com/2018/04/how-trump-could-hurt-amazon-com-inc-stock/.

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