Amazon Limps Out of the Holiday Season

Spending rose 3.4% this holiday season, which is measured by retail sales starting November 1. Online sales rose by 18.8%, while in-store sales were up only 1.2%. This trend should serve the nation’s largest e-commerce company, Inc. (NASDAQ: AMZN), well. However, its stock has languished recently, while shares in large brick-and-mortar retailers have climbed.

The holiday sales data provided by Mastercard SpendingPulse is considered accurate because Mastercards are used for so many purchases. The trend toward online shopping has been in place for over two decades. There is nothing new or unexpected about the information.

Amazon shares over the past three months are up less than 1% to 1,780. Walmart Inc.’s (NYSE: WMT) are higher by 4% to $119. Target Corp. (NYSE: TGT), the second-largest brick-and-mortar retailer, has a gain of 21% to $110. Among the reasons for the differences is the assumption that Walmart and Target are picking up online market share and have for several quarters. If this is true, it has to be at Amazon’s expense, given its huge revenue footprint.

Walmart has turned the tables on past beliefs about the difficulty of operating stores instead of websites. The Wall Street Journal recently reported that it will use its stores as hubs for grocery pickup, the equivalent of doctor’s offices and sources of computers for drones and autonomous cars. Some of this seems futuristic and perhaps unlikely. However, it is a bold and well-planned way to flank Amazon.

Amazon’s value has languished for two other reasons. The first is that its drive into high-priced next-day delivery will continue to erode markets and put downward pressure on earnings. The other is that Amazon is in the rifle sights of the federal government. That may make it a target for antitrust investigations. In the worst case, there could be a move to break it apart as AT&T was in the 1980s.

Amazon, by another measure, is still far ahead of Walmart and Target. Its total market value is $887 billion. (Additionally, it is among America’s most widely respected companies.) Walmart’s is $339 billion, and Target’s is only $65 billion. Does that make the argument for the progress of Target and Walmart as less meaningful? Maybe not. The two big retailers are still gaining value. Amazon is not.

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