Amazon Shares Drop After Trump's Tweet
By Ryan Veez
This week has been possibly one of the worst yet for Donald Trump, a statement that isn’t said lightly, after his walking back on criticism of Neo-Nazis has earned bipartisan condemnation. One entity that Trump isn’t so afraid to speak out on is Amazon, and CNBC reports that his latest tweet is carrying some potential financial consequences.
On Wednesday, Trump blasted Amazon for what he describes as hurting retailers and leading to the loss of U.S. jobs. In premarket trading, Amazon shares fell as much as 1% following the tweet, and the stock closed down 0.5% yesterday, underperforming the SPDR S&P Retail ETF's 0.9 percent gain. "While this is not his first tweet about Amazon and taxes (and of course, the Washington Post), we do find it interesting that he is now linking Amazon and job losses in traditional retail," KeyBanc Capital Markets analyst Edward Yruma wrote in a note to clients Wednesday.
Yruma is referencing a set of tweets back in July where Trump bashed The Washington Post, which is owned by Amazon CEO Jeff Bezos, as well as implying that Amazon did not pay internet taxes in June. What may be more concerning to those at Amazon is words from Treasury Secretary Steven Mnuchin, who hinted that that the administration may take “a position” on Amazon’s tax collection policy, when asked at a Senate hearing.
"So this is an issue that we've been looking at very carefully within the administration, and we expect to come out with a position shortly," Mnuchin said. "I am encouraged that Amazon is now charging tax, I believe, on their own sales but not the marketplace. I'm not sure I understand the consistency on that, but I respect the states' ability that there's an awful lot of money that's not being collected." Mnuchin is referencing the “third-party” marketplace, where other firms sell through Amazon, rather than first party sales.
Note that as of April 1st, Amazon began collecting state sales tax nationwide for products it sells directly, so called "first-party" sales, with the exception of states that don't have a sales tax: Alaska, Delaware, Oregon, Montana and New Hampshire. Why Trump is singling out Amazon over companies in his disbanded CEO's council isn’t clear, but chances are that The Washington Post and its criticism is somewhere in the center.