Categories Earnings, Markets, Retail

Amazon under Trump’s ire but might clinch Pentagon deal

President Trump has declared a war of sorts on Amazon (AMZN) and its CEO Jeff Bezos. He has severely criticized the online retailer for not paying taxes, causing retail store closures and driving the US Postal Service almost broke. His Twitter rants against the company continue unabated. Trump has criticized The Washington Post, which is also owned by Jeff Bezos, and called it fake news. The Washington Post has denied any interference in its operations from Bezos.

Trump’s wrath against Amazon and Bezos, which seems somewhat personal, has raised concerns on Wall Street. On the first Monday in April alone, Amazon shares dropped 5%, losing over $36 billion in market cap and taking the market down with it.

Amazon is one of the top companies in the US and one of the popular stocks on the market. Plenty of discussions have cropped up on the topics of Amazon’s taxes, the company’s agreements with the US Postal Service, its impact on competitors and so on and so forth.

Some have stated that Amazon collects sales tax in states where it is charged while others have said that sales tax on third-party vendors should be looked at. With regards to the post office, many have stated that the US Postal Service is losing money, but Amazon is not to blame. Regulators have deemed Amazon’s contract with the post office as profitable.

The post office has seen declines in letters, which is one of the prime causes for its losses. If anything, the postal service appears to be benefitting from Amazon’s package deliveries. As for Amazon, increases in shipping rates are likely to have an impact, but analysts have offered reassurances that Amazon is profitable enough to withstand any impact that comes and any such hikes would not hurt it much.

Amazon is diversified enough to make it through these challenges, and the stock is likely to recover soon. The latest buzz is that Amazon is close to clinching a deal with the Pentagon for cloud services. The contract is said to be valued at over $10 billion over the next ten years, and if Amazon wins the deal, it will catapult the company to a significantly powerful position.

Questions have been raised over the wisdom of placing top secret government information in the hands of a single entity along with counter-arguments that this was unlikely to happen. A final decision is yet to be made, but if Amazon is successful in gaining the contract, the effect on the company’s stock and value will be one to watch out for.

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