Amazon.com’s stock fell further in early trading before recovering Thursday after President Trump again lashed out at the e-commerce giant over its tax payments, its impact on other U.S. retailers and its contract with the U.S. Postal Service for deliveries.
“I have stated my concerns with Amazon long before the Election,” Trump said on Twitter early Thursday.
“Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!” he said.
Amazon’s stock then dropped 2.1% in early trading after tumbling 4.4% Wednesday following a report that Trump wants to “go after” Amazon to curb what he sees as its competitive advantage.
But the stock later rallied Thursday and closed with a gain of $15.92, or 1%, at $1,447.34 a share.
Trump has long railed against Amazon, and he also hasn’t been shy about his disgust for the Washington Post, the newspaper owned separately by Amazon Chief Executive Jeff Bezos.
But his comments and purported desire to change Amazon’s business practices are affecting the company’s stock, in good part because investors are much more skittish these days about highflying technology shares and any new obstacle that might hinder Amazon’s astonishing growth.
Before the latest declines, Amazon’s shares had soared more than 70% over the prior 12 months, a surge that more reflects Amazon’s future growth prospects than its current size and earnings ability.
So investors were ready to cash out at least some of those big gains when the news site Axios.com reported that Trump was “obsessed” with somehow further regulating Amazon’s business model.
“People are starting to get concerned about these valuations” for the shares of Amazon and other technology firms, said Jerry Braakman, chief investment officer of First American Trust in Santa Ana, which continues to hold shares of Amazon as part of the $1.1 billion of assets it manages.
Amazon’s stock closed at $1,431.42 a share Wednesday, a drop of $65.63, or 4.4%, after being down more than 7% during the day. That lopped $31.8 billion off the Seattle-based company’s total stock market value, to $693 billion.
Wall Street “is now fearful that the long-awaited Trump vs. Amazon battle could finally be on the horizon,” Daniel Ives, head of technology research at GBH Insights, said in a note to clients Wednesday.
Amazon declined to comment.
Amazon is one of the so-called FANG stocks that lead the technology sector: Facebook Inc., Amazon, Netflix Inc. and Google, now part of Alphabet Inc.
The sector already was under pressure partly because of the growing criticism surrounding Facebook, stemming from the misappropriation of about 50 million Facebook users’ personal data. Facebook’s stock has plummeted about 20% since Feb. 1.
“With Facebook and regulatory worries swirling round tech names, the last thing nervous tech investors wanted to see today was news that Trump is targeting Bezos and Amazon over the coming months,” Ives wrote.
Citing unidentified sources, the Axios report said Trump talks about changing Amazon’s tax treatment — particularly how consumers’ purchases on Amazon get taxed — “because he’s worried about mom-and-pop retailers being put out of business,” and that the president believes Amazon “is killing shopping malls and brick-and-mortar retailers.”
It’s true that a growing number of retail chains have closed stores, scaled back operations or filed for bankruptcy reorganization in recent years, partly because of their inability to keep pace with consumers’ shift toward more internet shopping.
Most retail chains also have developed their own e-commerce sites in hopes of competing with the likes of Amazon and mass merchants such as Walmart Inc. and Target Corp. that have sizable online stores.
The article didn’t say what Trump might try to do with Amazon, or if there’s much he can do. White House Press Secretary Sarah Huckabee Sanders said Wednesday that “we have no announcements and no specific policies or actions that we’re currently pushing forward or considering.”
But she added: “The president has said many times before he’s always looking to create a level playing field for all businesses, and this is no different.”
Trump has tweeted about Amazon several times since his election, and the Washington Post has come under attack as well.
“The #AmazonWashingtonPost, sometimes referred to as the guardian of Amazon not paying internet taxes (which they should) is FAKE NEWS!” Trump tweeted last June 28.
Then on Aug. 16 he tweeted: “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”
The issue with Amazon, which had sales of $178 billion last year, mainly is over the sales tax that a consumer might or might not pay when making a purchase on Amazon’s website.
Amazon now collects sales taxes across the country in states that have a sales tax and where Amazon has a physical presence with distribution centers or other facilities, such as California. But a sales tax often is not collected on purchases made from third-party sellers that appear on Amazon’s website, and critics contend that gives the web platform a price edge over other retailers that are required to collect a sales tax.
The U.S. General Accounting Office said last November it estimated that state and local governments could have gained up to $13 billion in 2017 “if states were given authority to require sales tax collection from all remote sellers.”
The issue might be resolved elsewhere in the federal government. Congress could pass legislation making online sales taxes more uniform. And the Supreme Court is set to hear a case that could allow states to require all online sellers to collect sales taxes, regardless of whether they have a physical presence in the state where the buyer lives.
Amazon, in its most recent annual securities filing with the government, said “we support a federal law that would allow states to require sales tax collection by remote sellers under a nationwide system.”
Trump also complained Dec. 29 that the loss-ridden U.S. Postal Service wasn’t charging Amazon enough to deliver the retailer’s packages. “Should be charging MUCH MORE!” he tweeted.
Amazon declined to comment on the dollar amount of the USPS contract, in which the Postal Service delivers Amazon packages not carried by Amazon, UPS and FedEx. But the Postal Service, in its annual report to Congress, said its revenue from shipping and packages in the year that ended Sept. 30 was $500 million above its forecasts, at $19.5 billion, “due to e-commerce growth” and successful marketing and sales campaigns.