What’s the issue with President Donald Trump and Amazon.com, Inc. (NASDAQ:AMZN)? It doesn’t take a rocket scientist to realize that Trump isn’t a fan of Amazon founder and CEO Jeff Bezos, and that is weighing on Amazon stock.
Bezos owns The Washington Post, a publishing unit that Trump is not very fond of. Never mind that Bezos reportedly has nothing to do with the day-to-day coverage at The Washington Post in the first place. It probably doesn’t help that the e-commerce wave in general works against physical retail locations. That’s a negative on commercial real estate and considering that Trump has made his name in real estate, he’s probably not a big fan of that either.
Despite being the country’s second-largest private employee — behind Walmart Inc (NYSE:WMT) — Trump is under the impression that Amazon has had a negative impact on the U.S. labor force. I could understand that logic at first glance, but for the President of the United States to tweet about it seems pretty short-sighted.
Amazon may be the leader of e-commerce in the U.S., but it’s not the only player. Plenty of other traditional retailers have even jumped in on online sales. From WMT, Target Corporation (NYSE:TGT), Kohl’s Corporation (NYSE:KSS), Macy’s Inc (NYSE:M), Nordstrom, Inc. (NYSE:JWN) and seemingly every other retailer looking to avoid irrelevancy have all taken to the net.
Amazon isn’t the one to blame for job loss in retail, e-commerce as a whole is. That comes down to consumers’ preference for simplicity and convenience. At least while jobs are vanishing in retail, they are growing in warehouses, logistics and tech, all major segments of Amazon.
Then there’s the whole post office take …
Anyway, all of Trump’s anti-Amazon banter has really weighed on it. I’m not a student of law, but this seems borderline illegal — that the U.S. President can repeatedly slam Amazon because of his distaste for its founder and CEO, aiding in the decline of its stock price.
Does anyone else see something wrong with that picture?
Trading AMZN Stock
It’s also concerning to investors that Trump is dining with Oracle Corporation (NASDAQ:ORCL) co-CEO Safra Catz. The company is in the midst of battling Amazon for the renewal of a multi-billion cloud-computing deal for the Pentagon. Unlike Bezos, Catz is held in high regards by Trump. I’m not sure how much sway or control Trump has when it comes to choosing the next provider. But if he can influence it, that could definitely be a short-term negative for Amazon’s top and bottom line.
Before its strong bounce on Wednesday, Amazon stock was down about 16% from its highs. On the one hand, a fall like this makes you want to gobble up Amazon stock. After all, what other company does what Amazon does?
On the other hand, Amazon stock is still up more than 50% over the past 12 months. It could easily have more downside left. Now below the 50-day moving average, momentum is certainly waning. However, support from the 100-day and near $1,350 has held up so far.
If it continues to hold, a rebound back to $1,450 could be in store and if the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) — and Trump — cooperate, a retest of its highs may not be far off. If Trump continues tweeting, the Department of Defense goes with Oracle and/or the QQQ ETF continues to fall, AMZN could be heading lower.
One area to watch would definitely be $1,200. The 200-day moving average could also come into play near this level.
Is Amazon Stock a Buy or Sell?
Amazon is the king of e-commerce, a leading cloud-computing provider, owner of the best commercial voice recognition products and is making more and more headway into our everyday lives. It’s a titan getting more powerful by the day.
If you’re a long-term investor with a 20-year or more outlook, it’s hard not to own Amazon in some capacity. Its long-term impact is just too great to miss out on.
That said, it’s a high-volatility, low-earnings (for now) play. Those who feel comfortable can buy it in chunks when it declines. Near $1,350 isn’t a bad place to start. Near $1,200 is a certain spot to buy, and between $1,000 and $1,050 even grandma should consider nibbling.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
