Wall Street Unfazed by Trump Disdain of Bezos & Amazon

• March 29 2018
• Kamaron Leach

President Donald Trump has taken aim and is at the other end of the barrel. But Wall Street is much less concerned with Trump’s claims, though analysts acknowledge that the President’s attention presents a near-term headline risk. Amazon briefly fell 4.6 perc…

President Donald Trump has taken aim and is at the other end of the barrel. But Wall Street is much less concerned with Trump’s claims, though analysts acknowledge that the President’s attention presents a near-term headline risk. Amazon briefly fell 4.6 percent in the first half hour of trading before rallying to snap a two-day skid.

“I have stated my concerns with Amazon long before the Election,” Trump said on Twitter Thursday morning. “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!”

Axios’ report yesterday alleging Trump was "obsessed" with Amazon led to enough concern about regulatory risk to spur a 4.4 percent decline on Wednesday. But "having earned significant goodwill from consumers," writes Deutsche Bank analyst Lloyd Walmsley, "we do not think attacking Amazon will be popular."

Bank of America Merrill Lynch, Justin Post

(buy, PT $1650)

"Facebook’s regulatory issues have put regulatory risk in the spotlight, and the 4.4% decline in Amazon’s stock has raised questions on potential government actions. It doesn’t appear that the government has an existing plan to target Amazon, so we see a particularly attractive buying opportunity assuming the tech sector stabilizes."

BofAML believes Amazon is a "well-liked consumer brand, and any pressure would be met with some consumer resistance." Post says the U.S. could pressure Amazon several ways, including: making all third-party sellers collect sales tax, regulating Amazon’s third-party seller commission structure, and even raising U.S. Postal Service shipping fees.

Stifel, Scott Devitt

(buy, PT $1,800)

Stifel says Amazon collects sales tax on its owned inventory in all 45 states that have a state sales tax and Washington, D.C.; believes Trump’s tax comments, which really refer to third party merchants, "is not a new issue" and actually favorably positions Amazon relative to its peers.

"If Amazon were to collect sales tax on behalf of 3P merchants, it would raise the price of 3P merchandise relative to Amazon’s own inventory, hurting 3P merchants (small business?) and favoring Amazon."

Deutsche Bank, Lloyd Walmsley

(buy, PT $1,650)

"Trump’s ire towards Amazon is significantly less concerning"; it’d be "difficult for the current administration to materially change the landscape for Amazon."

"We see some small risk that the President could use the bully pulpit to criticise Amazon, and potentially put up some road blocks for the company, but we see it as far less fragile than Facebook in its situation. We think, for the most part, that it would be difficult for the current administration to materially change the landscape for Amazon."

Compass Point, Isaac Boltansky

Compass Point believes there are "two underlying components to President Trump’s disdain for Amazon: an affinity for ’mid-century business,’ as Axios puts it; and Jeff Bezos’ ownership of the Washington Post."

"The headline risk for Amazon is likely to continue for as long a President Trump calls the White House home, but we doubt his personal antipathy for Jeff Bezos will translate into actual policy."

Birinyi Associates, Laszlo Birinyi

President Trump’s "threats have a history of limited or no follow through," writes Birinyi, falthough it’s always possible "it will be different this time."

"In addition to those comments regarding Amazon, we bought Ford in the Winter of 2017 when he promised to help his ‘good friend’ Bill Ford which cost us almost 40%."

Birinyi says "selling is less acute than it appears"; block trades show large investors are buying tech stocks during the latest decline.