With attacks escalating on Amazon.com (AMZN) from President Trump, is the e-commerce leader's once-resilient stock showing signs of cracking?
XAmazon stock did manage to turn itself around Thursday and go from a 4.6% loss to a 1.1% gain to 1,447.34 by the close on the stock market today. But that came after shares fell 4.4% on Wednesday and plunged below their 50-day moving average, where they remained by Thursday's close.
The company has been a long-time member of the IBD Leaderboard list of exclusive stocks but has come under heavy institutional selling over the past two weeks. GBH analyst Daniel Ives said Trump and Amazon Chief Executive Jeff Bezos are on a collision course, as worries pressure the stock. Bezos owns the Washington Post, which won a Pulitzer Prize last year for its investigation of Trump's donations to charities.
"With media reports today that President Trump is 'obsessed' with Amazon and is exploring antitrust, regulatory, and potential tax ramifications/changes for Bezos & Co., the Street is now fearful that the long awaited Trump vs. Amazon battle could finally be on the horizon," Ives wrote in a report to clients Thursday. "The Street is having fears and a high level of angst about reports that Amazon and Bezos have a bullseye on their backs."
But, Ives added, "We believe the reality of these worries (about) altering the company's business model and future tax structure are low and we would be buyers of the name on weakness."
For a market leader such as Amazon, the 50-day moving average can act as a support level during an uptrend. Yet it can also act as a resistance level during a downtrend. If a stock breaks below the 50-day line in heavy volume and can't rally back, it's often a signal that buying demand is drying up and the stock's run is ending. Amazon trading volume is running four times above average.
Amazon's Last Visit Below 50-Day
The last time its shares fell through its 50-day moving average was in mid-October, but on average volume. The stock then surged 13% on Oct. 27 after reporting third-quarter results that crushed estimates. From that point it rose another 47%, to hit a record high of 1,617 on March 13. Since then, including today's action, shares are down about 11.5%.
In a tweet Thursday, Trump again threatened to target the company's tax status.
"I have stated my concerns with Amazon long before the Election," Trump wrote in the tweet. "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!"
Amazon's fall Wednesday followed a report from Axios saying Trump has wondered aloud if there may be any way to go after the company with antitrust or competition law. It said Trump is bothered by the impact the company has on small businesses being shuttered.
The White House responded to the Axios story in a tweet, saying "there are no specific policy changes regarding Amazon right now, but always looking at different options."
Amazon has previously been a target of Trump. In December, Trump lashed out at the company and the U.S. Postal Service in a tweet, saying it should pay higher fees for package deliveries. In August, Trump attacked the company over taxes and accused it of causing job losses during a time when Amazon was aggressively hiring.
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