A recently released Bloomberg report sheds light on Amazon’s (NASDAQ:AMZN) troubled drone delivery service isn’t going to do any favors for struggling AMZN stock. The distressing news piece talked about the obstacles faced by the tech giant, suggesting that the business is still a long way from getting its drone delivery program off the ground.
According to the report, five crashes — thankfully resulting in no injuries — took place over four months last year at Amazon’s testing site in Pendleton, Oregon. Additionally, former and current employees of the company have criticized the rushed rollout of drones over safety.
However, not everyone got out unscathed. For example, Cheddi Skeete — a former project manager for the drone program — was sacked by Amazon for speaking about safety concerns with his manager.
That said, Amazon spokesperson Av Zammit has refuted these claims and reiterated the importance of safety in the company’s drone program. Specifically, in a statement to The Verge, he talked about how safety is the top concern with the program:
“We take safety reporting seriously — we have a safety reporting system that’s well-known by all our team members, and we encourage them to raise any safety suggestions and concerns. In addition to using this system, we encourage employees to provide any other feedback they may have through their manager, HR, or our leadership team.”
Bottom Line on AMZN Stock
Overall, Amazon founder Jeff Bezos laid out his ambitious plans to fill the skies with delivery drones almost a decade ago in 2013. However, after spending billions of dollars and assembling a sizeable team globally, the plan is yet to fruition.
Nonetheless, I don’t expect Amazon to stop investing in the program anytime soon. If it does manage to kickstart its drone program, it stands to save up to 80% on last-mile shipping. In turn, the cost reductions will further widen its margins, growing rapidly for several years.
However, these setbacks often invite a buy-the-dip scenario. AMZN stock has been on a negative streak in the past two weeks, down more than 11%. The good news, though, is that this created an opening for audacious investors. Why? Because Amazon’s business will continue to perform exceptionally well this year and beyond. And that makes AMZN stock one to buy.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
