The Federal Trade Commission (AMZN) over antitrust issues. Specifically, the lawsuit contends that Amazon uses various methods to unfairly undermine its competitors. Speaking on CNBC, investment manager Stephanie Link of Hightower Advisors contended that AMZN stock would actually be boosted if Amazon is forced to split itself into two parts as a result of the lawsuit.) and 17 states have sued Amazon (NASDAQ:
More About the Government’s Contentions and Amazon’s Response
The FTC contends that Amazon has a monopoly in e-commerce and uses “unfair strategies to maintain its monopoly powers” while preventing its competitors from charging lower prices. Additionally, AMZN’s prices for sellers are excessive, and it undermines the value of the products that consumers receive, the FTC stated.
For its part, Amazon retorted that: “The practices the FTC is challenging have helped to spur competition and innovation across the retail industry” while also helping those who shop on Amazon and the many businesses that sell products on the platform.
Could a Split Boost AMZN Stock?
If Amazon is forced to divide itself into a cloud firm and an e-commerce business, its shares will receive a higher valuation than presently, Link said. That’s because investors will appreciate having the opportunity to just gain exposure to its cloud unit or only buy the shares of its e-commerce business, she explained.
The revenue of Amazon’s cloud business climbed 12% year-over-year last quarter, “is stabilizing” and could accelerate, the investment manager said. As for Amazon’s retail business, its margins “were double expectations (in Q2), and management thinks” that the unit’s operating margins can increase to their “old highs,” Link reported.
On the date of publication, Larry Ramer did not hold (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.