Insights

Why Amazon Is Down More Than 4% Today

What happened
It’s another bad day for the broad market, but it’s an even worse day for Amazon (NASDAQ: AMZN) investors. Shares of the e-commerce giant were down to the tune of 4.1% as of 1:21 p.m. ET Tuesday, according to data from S&P Global Market Intelligence, seemingly in response to the fact that workers at several of its warehouses are moving forward with efforts to unionize.
There may be more to the share price weakness the company has been experiencing since late last month, however, than fresh labor woes.
So what
For the second time in less than a month, Amazon employees in Staten Island are deciding whether or not to form a labor union. The previous bid was successful, and it’s plausible that when the voting is complete at a nearby facility, the majority there will also favor forming a union.

Image source: Getty Images.

There’s nothing necessarily new or surprising happening in regards to Amazon’s relationship with its workers here. However, and I would be remiss if I didn’t point out that much of the 18% decline that Amazon shares have suffered since last month’s peak can be attributed to the weak market environment. The tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) is down 14% over the same period.
In other words, with or without the growing likelihood that the company will soon have to negotiate pay and working conditions with a growing cadre of unionized warehouse workers, it’s likely that Amazon shares would be sinking.
Now what
The prospect that more of Amazon’s employees may choose to form and join unions may on the surface look like something that could trim the company’s profitability. But bearish traders may be placing more weight on this development than is merited. Companies can adapt to new challenges, and Amazon in particular has done that as well as any organization in the e-commerce arena.
Still, while stepping into good companies while their stocks are down is a popular strategy, there’s a distinct possibility that the combination of traders’ worries about how more Amazon employee unions will impact its profits and a continued marketwide sell-off of tech and growth stocks will drive its shares down even further from here.
Bottom line? Attempting to time a stock’s exact bottom before entering a new position is an ill-advised idea. In this case, though, it might be wise to wait until it’s clearer that all the relevant worries have run their course before jumping in.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon. The Motley Fool has a disclosure policy. –

What happened

It’s another bad day for the broad market, but it’s an even worse day for Amazon (NASDAQ: AMZN) investors. Shares of the e-commerce giant were down to the tune of 4.1% as of 1:21 p.m. ET Tuesday, according to data from S&P Global Market Intelligence, seemingly in response to the fact that workers at several of its warehouses are moving forward with efforts to unionize.

There may be more to the share price weakness the company has been experiencing since late last month, however, than fresh labor woes.

So what

For the second time in less than a month, Amazon employees in Staten Island are deciding whether or not to form a labor union. The previous bid was successful, and it’s plausible that when the voting is complete at a nearby facility, the majority there will also favor forming a union.

Image source: Getty Images.

There’s nothing necessarily new or surprising happening in regards to Amazon’s relationship with its workers here. However, and I would be remiss if I didn’t point out that much of the 18% decline that Amazon shares have suffered since last month’s peak can be attributed to the weak market environment. The tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) is down 14% over the same period.

In other words, with or without the growing likelihood that the company will soon have to negotiate pay and working conditions with a growing cadre of unionized warehouse workers, it’s likely that Amazon shares would be sinking.

Now what

The prospect that more of Amazon’s employees may choose to form and join unions may on the surface look like something that could trim the company’s profitability. But bearish traders may be placing more weight on this development than is merited. Companies can adapt to new challenges, and Amazon in particular has done that as well as any organization in the e-commerce arena.

Still, while stepping into good companies while their stocks are down is a popular strategy, there’s a distinct possibility that the combination of traders’ worries about how more Amazon employee unions will impact its profits and a continued marketwide sell-off of tech and growth stocks will drive its shares down even further from here.

Bottom line? Attempting to time a stock’s exact bottom before entering a new position is an ill-advised idea. In this case, though, it might be wise to wait until it’s clearer that all the relevant worries have run their course before jumping in.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon. The Motley Fool has a disclosure policy.

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