An Amazon Turnaround

Amazon’s stock has taken a nosedive unlike any in the past several years. Year to date, it is down 34%.

The cause of this is that its huge e-commerce business has been crippled by high costs. It has continued to keep labor costs down, and some would say this is at the expense of low-paid workers. It also overbuilt its distribution system, in particular its warehouse network.

Lost, to some extent, is that Amazon continues to be the global leader in cloud computing. It remains one of the foundations of global tech sales growth. The industry has become crowded with start-ups. Yet, these seem to have taken business from one another and weak players like IBM. Amazon and Microsoft continue to have the best market shares.

Amazon will close many of its warehouses and right-size its e-commerce business. The company has a reputation of nimbleness, and that has not been dented. Margins on e-commerces sales should be back to normal levels by the holiday season. Amazon’s shares have sold off too much.

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