Shares of the world’s biggest online retailer Amazon plunged on Tuesday after a report that U.S. President Donald Trump wants to go after the company’s “tax treatment.”
Independent news website Axios reported that Trump was “obsessed” with Amazon and was looking into ways to go after the company with antitrust or competition law, because he believes Amazon is putting mom-and-pop retail stores out of business.
“Trump’s wealthy friends tell him Amazon is destroying their businesses. His real estate buddies tell him — and he agrees — that Amazon is killing shopping malls and brick-and-mortar retailers,” the website reported, according to sources.
Amazon shares fell as much as 7.4 per cent in morning trading on the tech-heavy Nasdaq exchange in New York — wiping out more than $ 53 billion US from its market value.
Shares recovered a bit after a White House official told Reuters that there were no specific U.S. policy changes at the moment regarding Amazon, but the administration was always looking at different options.
The stock still closed down 4.4 per cent on Wednesday afternoon.
Trump has targeted Amazon in the past with tweets last year saying that Amazon is doing “damage to taxpaying retailers,” cities and states. He has also often criticized the Washington Post, which is owned by Amazon founder and chief executive Jeff Bezos.
Pressure on tech
The e-commerce giant’s market tumble comes at a time when other big tech firms like Facebook have been dragging down the sector, as the companies continue to face scrutiny over privacy and regulatory issues.
Oliver Jones, markets economist at research firm Capital Economics said tougher regulation, particularly in the handling of customer data and the risk of growing protection following trade measures announced by the U.S., could “darken the prospects” for earnings by tech firms.
“Clearly if regulatory scrutiny or protectionism are ratcheted up further, then there is a good chance that the IT sector will continue to fare particularly badly,” he said in a note on Wednesday.
He did, however, add that the impact of these two factors would not be the same for all tech firms.
Those focused mainly on software could lose in an environment of tougher regulation on data privacy, and have already performed the “worst of all since the revelations about the alleged misuse of data in election campaigns a couple of weeks ago.”
“Meanwhile, those focused instead on producing hardware or semiconductors that rely on global supply chains appear at greater risk from an escalation of trade tensions,” he added.
Shares of Facebook are down almost 14 per cent this year, while the benchmark Nasdaq composite, where most of the big tech stocks are listed, is the worst performer among benchmark U.S. indexes today.
The index has lost nine per cent since hitting its peak this year over two weeks ago.
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