Amazon.com, Inc.(NASDAQ:AMZN)‘s investors are slowly losing patience with the company’s game plan amidst declining profit margins as the stock’s price continues to lose value. CNBC’s John Jannarone argues that the only solution out of the ongoing enigma could be an activist investor getting involved with stock to try and shore things up.
Jannarone still acknowledges that it will be hard for an activist investor to get involved with the stock as CEO, Jeff Bezos, owns 18% of the company’s stock without any dual class ownership. Amazon.com, Inc. (NASDAQ:AMZN) changing direction in favor of investors will be hard in the short term while as long as Bezos holds 18%.
“The reason that investors are fed up, this is self-inflicted, this guys can’t stop finding something to spend money on. I mean drones, 3D phones, grocery delivery in Brooklyn, and it is showing up in the numbers. Last quarter operating expenses up by 37%, Revenue up 20%.You can’t keep doing that,” said Mr. Jannarone.
Amazon.com, Inc. (NASDAQ:AMZN) has been on a spending spree in the recent years on a number of entities, something that has affected profit margins with an increase of operating expenses. Lack of a clear breakdown of how the company spends its cash may also make it hard for activist investors to consider the stock.
Bezos has aligned Amazon.com, Inc. (NASDAQ:AMZN)’s strategy to focus solely on expansion, revenue growth and starving of competition with long-term investors being the biggest beneficiaries.
“[..] Even though it might not be an activist target at some point you got to wonder if the company is going to start to listen. If investors are this mad we are sitting here talking about it, Bezos will not just not go on and on forever upsetting investor, “said Mr. Jannarone.
Amazon.com, Inc. (NASDAQ:AMZN) is 28% down for the year, and although it is not cheap compared to other stocks. It has not been down with such huge margins in almost five years.
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