E-commerce mega retailer Amazon.com, Inc. (NASDAQ:AMZN) has certainly faced its share of headwinds in recent decades. Overcoming the perception that e-commerce would always represent a small portion of the global retail base, to delving into a variety of sectors which would have otherwise been the demise of other firms, to continuing to invest heavily in infrastructure in a bid to become the world’s largest company at the expense of near-term profits, Amazon is a shining example of a company that knows how to handle headwinds.
That being said, on Wednesday Amazon shed more than $30 billion U.S. of market capitalization following a report that the company may be in the crosshairs of the Trump Administration. A number of reports cited the possibility of increased taxation and/or anti-trust concerns which may affect the company’s long-term free cash flow calculations and therefore its current valuation.
While Amazon remains a very difficult company to value on a free cash flow basis, due in large part to the fact that the company still has razor thin margins and remains a difficult company to forecast earnings for, the company has continued to reinvest in its extremely high ROE business, one which has swallowed up global market share at an amazing pace.
I believe a “Trump tech tax” targeting companies like Amazon is likely to only hurt the U.S. consumer, given the prevalence of Amazon domestically – Amazon’s growing presence globally will allow the company to strategically focus its efforts on lower-tax areas, giving the company a small moat to defend itself against such legislation.
Invest wisely, my friends.
Tech Insider
