Impact of the Trade War on Amazon
The current situation of Amazon in the context of the trade war between China and the USA has a strong impact on the company, as about 70% of Amazon’s offerings come from China. This dependency makes Amazon particularly vulnerable to the course and outcome of the trade conflict, which is reflected in various areas.
Tariffs and Import Costs
Tariffs imposed by the US government on Chinese imports increase costs for Amazon. This can lead to higher prices for consumers or shrink profit margins.
Order Cancellations
To mitigate the effects of rising import costs, Amazon has already canceled orders for products from China and other Asian countries. Affected items include goods such as beach chairs, scooters, and air conditioners.
Stock Price Development
Amazon’s stock has fallen by about 13% to 22% this year, driven by concerns about trade policy.
Financial Developments of Amazon
Despite the challenges, Amazon was able to increase its revenue by nine percent to $155.7 billion in the last quarter, with a profit of $17.13 billion. AWS, the cloud subsidiary, reported revenue growth of 17%.
Profit Forecast and Short-Term Effects
Amazon has forecasted an operating profit of between $13 and $17.5 billion for the second quarter, which falls short of analysts’ expectations and has pressured the stock price in the short term.
Market Developments and Investor Sentiment
Investors are showing optimism regarding Amazon’s AI initiatives, despite concerns about the long-term profitability of investments in data centers. Additionally, competition in the cloud sector, particularly from Microsoft and Google, has increased compared to AWS, adding pressure on Amazon.
Overall, continuous monitoring of geopolitical tensions and their impacts on Amazon is essential for investors.