Once a relatively small online bookseller, Amazon (NASDAQ:AMZN) is now a sprawling giant of a company. Lately, it seems that Amazon wants to dip its hands into a wide variety of business segments. However, AMZN stock traders shouldn’t always assume that more is better. Amazon’s latest move into healthcare won’t necessarily yield the results that perma-bulls are undoubtedly hoping to see in 2023.
The fact is, no business is infallible or invincible, and that includes Amazon. For instance, we can discern cracks in the foundation as cooling sales prompt Amazon to divest a vacant California office complex the company purchased a year and a half ago.
That $123 million property investment didn’t pan out, so prospective investors should consider whether Amazon’s management is making other unwise decisions. Indeed, this year could prove to be a major disappointment for loyal shareholders.
AMZN Stock Traders Should Be Leery of Amazon’s New Fee
For Amazon to stay at the top of its game, management has to be responsive to the customers’ needs. Unfortunately, Amazon’s new fee suggests that the management may be insensitive to the struggles of small-scale consumers.
After all, those small consumers can add up to big-time revenue. However, during a time of elevated inflation, it’s not always easy for Amazon Fresh customers to afford pricey grocery purchases.
AMZN stock traders should consider whether it’s reasonable, then, for Amazon Fresh to start charging Prime subscribers a $10 service fee for orders of $150 or less.
Remember, these are Amazon Prime members who are paying $139 per year for that membership. Amazon is now applying an added service charge, during a time when families are struggling and food costs are elevated.
Amazon’s Prescription Drug Plan Might Not Be Successful
Again, we’re starting to detect signs that Amazon isn’t invincible. The added service fee for certain grocery purchases will undoubtedly be a turnoff for some customers. What about Amazon’s new venture into generic medications, though? Will this be a huge success?
That’s not guaranteed by any means. Amazon has made missteps in the healthcare sector before. Its telehealth service Amazon Care folded last year. Also, Amazon’s joint healthcare venture Haven Health closed down two years ago.
Therefore, investors should be wary of Amazon’s foray into the prescription drug business with RxPass. It’s unavailable in several U.S. states and can’t be used by Medicare and Medicaid members. Additionally, it’s questionable whether Amazon can generate robust revenue if it’s only charging $5 per month for RxPass.
What You Can Do Now
Despite some fans’ enthusiasm for the company, financial traders should know that Amazon’s track record isn’t perfect. Amazon is liable to failure, just like every other company is.
Charging people who already pay for Amazon Prime a service fee for certain grocery purchases could be a costly mistake. Moreover, no one can guarantee that RxPass will turn out to be a huge success.
Consequently, it’s wise for investors to watch AMZN stock and check for further developments without committing to a share purchase now.
On the date of publication, Louis Navellier had a long position in AMZN. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
