Economist Ted Bauman agrees with the world that Amazon is a giant in the retail industry. However, Bauman emphasizes that Amazon is not a monopoly and that Amazon stockholders need to be aware of the company’s weaknesses.
— Ted Bauman Guru (@TedBaumanGuru) December 5, 2018
Bauman points to several reasons that Amazon does not have the characteristics of a monopoly. First, the majority of online shopping (56%) is done with retailers other than Amazon. The company receives less than one-twentieth of the retail income generated in the United States because 90% of the country’s shopping dollars still go to brick and mortar stores. Ted Bauman notes that due to competition, Amazon has not developed the traits of monopolies that consumers hate most: poor customer service and high prices.
Ted Bauman believes Amazon has several weaknesses that should concern Amazon stockholders. First, the economist says that due to the large volume of consumer data Amazon holds, the retailer is vulnerable to data security threats. Next, politicians, including the President, have said that Amazon engages in unfair business practices such as pressuring shipping services to lower prices because they cannot afford to lose Amazon as a customer. While trade and tariff wars could hurt Amazon’s stock price, Ted Bauman believes there’s a greater risks to holding Amazon stock. Since the company uses its profits to expand its business rather than pay dividends to stockholders, the only way to make money from Amazon stock is to sell it. That fact increases the likelihood that investors would dump Amazon shares if rumors of trouble arise about the company.
Ted Bauman is the editor of The Bauman Report, which covers wealth preservation strategies for over 100,000 subscribers. He also writes Smart Money and Alpha Stock Alert, which are based on the trading system he created. He was born and raised in the United States but went to live in South Africa as a young man. He is a graduate of the University of Cape Town with postgraduate degrees in economics and history. Ten years ago Bauman returned to the United States and lives in Atlanta.
Ted Bauman’s Twitter