Trump Slashes the Value of Amazon with One Tweet
Amazon is often criticized for tax policies that apparently cost states millions in lost revenue.
Now, Trump brings to light another downside of the online retailer: the effect on employment.
Trump’s tweet apparently didn’t fall on def ears. The company’s stock value immediately responded.
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!
— Donald J. Trump (@realDonaldTrump) August 16, 2017
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As The Blaze points out:
The tweet appeared to have some impact on Amazon’s market value, with the company’s stock falling as much as 1.2 percent following the tweet, according to CNBC. That amounts to a loss of approximated $5.7 billion in market cap.
Trump has criticized Amazon and its CEO, Jeff Bezos, multiple times before. The president has also carried a long-running feud with The Washington Post, which Bezos owns.
Trump and Treasury Secretary Steve Mnuchin have both expressed issues with Amazon’s tax policies, particularly whether or not Amazon should be required to collect sales taxes on purchases in states where the company has no physical presence.
The National Conference of State Legislatures reported that the tax loophole cost states $17.2 billion in lost sales taxes in 2016. Amazon began collecting sales taxes from all 45 states that have a statewide sales tax on April 1, according to CNN.
Amazon still doesn’t require shoppers to pay sales tax on purchases from third-party vendors that sell products through Amazon.
“I am encouraged that Amazon is now charging tax, I believe, on their own sales but not the marketplace,” Mnuchin said according to CNBC. “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.”
The Trump Factor
Trump consistently effects the economy with his insight. In other words, he can tweet a business and watch it rise. Thus, the opposite it also true. Early in the administration, companies like Macy’s learned the devastating effects of being anti-Trump.
Recall that Macy’s dropped Trump branded suits from their men’s line pre-election. They claimed it might polarize customers. Coincidentally, post-election they were forced to close nearly 70 stores.
Toyota shares also plummeted when Trump tweeted vows to stop Toyota from moving to Baja, Mexico.
In fact, as we previously noted, the Trump factor takes branding to new heights.
Brad Thomas, an editor of the Forbes Real Estate Investor and author of “The Trump Factor” said it’s incalculable how much brand equity can now be generated post-election.
Amazon now sits in a similar boat, facing losses due to the Trump factor.
If one tweet from Trump cost Amazon $5.7Billion, maybe it’s time Jeff Bezos takes notice. Since 2015, Trump has criticized Bezos for using the Washington Post as a tax shelter. Bezos owns the Post through a holding company. In fact, according to the Independent, Trump said: “Amazon’s stock would “crumble like a paper bag” if it could not use this arrangement.”
However, Amazon pays little attention to criticism. Instead, they are working to build an online monopoly- which might eventually lead to another form of government intervention. Busting up the monopolies is something the feds don’t take lightly.
However, it seems profits and losses might send a clearer message to Bezos. Now that Amazon lost a huge chunk of change in one day, perhaps they will look for ways to address Trump’s concerns.
It’s time Amazon collect taxes properly. Further, they need to look for ways to help build jobs into the economy. If Amazon continues to ignore Trump, they might find their stock plummeting faster than a speeding bullet.