Amazon Pauses Drone Deliveries In Texas, Arizona After Crashes, Plans Safety Upgrades

Amazon.com Inc AMZN paused commercial drone delivery last Friday in Texas and Arizona to fix the aircraft’s software.

The suspension followed the crash of two of its latest models at a testing facility in rainy weather, Bloomberg reports.

Amazon and Walmart Inc WMT have splurged billions to develop drone delivery technology. Amazon created the technology in-house while Walmart collaborated with Zipline and Alphabet Inc GOOG GOOGL Google’s Wing.

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Drone delivery services will likely become a $10 billion industry by the decade’s end.

Amazon’s drone operation aims to deliver 500 million packages annually by the decade’s end.

Eleven years ago, Amazon founder Jeff Bezos shared plans to build drones capable of delivering products to customers in less than half an hour.

In December, two MK30 drones crashed during flights at the airport in Pendleton, Oregon, which Amazon uses for testing.

The company later discovered a software issue that caused the accident.

The MK30 drones, cleared to commence operations by the Federal Aviation Administration in October, have delivered packages to customers’ homes in College Station, Texas, and Tolleson, Arizona.

Amazon representative Sam Stephenson told Bloomberg that deliveries will resume after the FAA approval.

Stephenson emailed Bloomberg, stating Amazon’s drones continued to deliver safely and within federal guidelines between the December crashes and Friday’s halt.

In December, the company completed its first test flight in Italy and plans to expand its service this year. It is also targeting the start of deliveries in the U.K.

Goldman Sachs’ Eric Sheridan expressed optimism about Amazon’s customer loyalty, backed by its subscription. The analyst flagged Amazon’s exposure to less discretionary categories (experiencing volatility in online spending from lower incomes) with high repeat behavior through subscriptions and essentials purchasing.

Amazon stock surged over 48% in the past 12 months. Investors can gain exposure to the stock through ProShares Online Retail ETF ONLN and Vanguard Consumer Discretion ETF VCR.

AMZN Price Action: Amazon stock is up 2.42% at $231.42 last check Tuesday.

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