Here's Why Amazon Is 'Winning The Right Way' Despite Trump's Concerns

President Donald Trump's reported obsession with targeting Amazon.com, Inc. AMZN is "significantly less concerning for investors" relative to Facebook, Inc. FB' data privacy fiasco.

The Analysts

Deutsche Bank's Lloyd Walmsley and Bank of America's Justin Post, that latter of which maintains a Buy rating and $1,650 price target on Amazon's stock.

'Winning The Right Way'

The media coverage of Trump-Amazon is certainly a "headache" for investors, but may be amplified as Facebook's data privacy fiasco brought up the topic of regulatory and political scrutiny, Walmsley said in a research note. Nevertheless, there's a "small risk" that Trump could "use the bully pulpit" to target Amazon.

It would be "difficult" for the Trump administration to materially change Amazon's business so the negative media coverage amounts to "largely distractions," the analyst said. Amazon is winning the retail war "the right way" and investors should view any weakness in Amazon's stock as a "buying opportunity" for the long-term.

The ongoing debate surrounding large global tech platforms and the impact on society does include Amazon, although the risk from any government changes is low.

I have stated my concerns with Amazon long before the Election. 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!

— Donald J. Trump (@realDonaldTrump) March 29, 2018

4 Actions The Government Could Take

It's unlikely Trump's administration has any existing plan to target Amazon, Post said in a note. Nevertheless, there are four actions the government can take in theory that could pressure Amazon's business.

1. The government could force every third-party sellers to collect sales tax. As it stands, Amazon only collects sales tax on first-party items, but many smaller sellers on Amazon don't collect taxes when they ship across state lines.
2. The government could raise the US Postal Service shipping fees it charges Amazon. Although it isn't clear what percent of Amazon's total volume goes through the national postal system, the company has multiple other shipping partners at its disposal.
3. Amazon charges sellers a fee for selling on Amazon and fulfills its orders which could lead to new third-party regulations. Amazon's retail margins are already low, however, which may "hurt the government's case."
4. The government could make the case that Amazon's cloud business, AWS, is supporting its retail investment and losses so it could try and separate the two businesses.

Price Action

Shares of Amazon were trading lower by more 2 percent at $1,400 shortly after Thursday's opening bell.

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