Time for Amazon to hit the Mayday Button.
Investors are beginning to wake up and realize that maybe this whole thing about putting long-term profits over short-term profits isn't as enchanting and magical as CEO Jeff Bezos once made it seem.
Amazon's stock plummeted an astonishing 10 percent in a day after the announcement of a $126 million quarterly loss on Thursday — the latest in a long string of losses for the e-commerce beast.
For consumers, Amazon's prices seem impossibly low. And that's because they are, in fact, impossible. You can't sell items that cheaply. No company could ever make a profit by selling goods at or below cost, and that's exactly what Amazon has done for as long as anyone can remember.
Bezos is a puzzling man. The delivery drones. The atomic clock. The Washington Post. Who can figure this dude out? Some commentators have wondered whether Amazon was set up to function as a de facto consumer charity. I've wondered that myself. I've come to quite the opposite conclusion.
Amazon won't raise its prices until it has achieved a majority of the market that brick-and-mortar retailers currently occupies. An entire generation of locally owned small businesses — and mid- to large-sized businesses — hang in the balance.
"The current investment cycle layers in increased technology and content costs as Amazon seeks to build itself into a complete consumption, payment and advertising platform for physical and digital goods," wrote analyst Colin Gillis of BGC Financial in a note to investors yesterday.
In other words, all this taking over the world ain't cheap!
Currently valued at $147 billion, Amazon is the 28th largest publicly traded company in the United States. And in the past 48 hours it lost $15 billion of its market value.
Investors are getting antsy.
I'm all about encouraging that sense of angst. Although Amazon's convenience and prices are hard to beat, I find myself spending a little more offline lately: shopping local, paying a little bit more here and there, and chalking it up to charity. You too can help keep Amazon stockholders worried and a little ticked off. You know what to do.
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