Right now, there are hundreds—if not thousands—of former small business owners lamenting that they lost their businesses and downtown shops to Amazon (NASDAQ:AMZN). However, Amazon’s primacy may not last much longer as the Federal Trade Commission is taking aim at Amazon with the goal of breaking it into smaller components. That left investors clearly concerned, sending Amazon stock down somewhat in Wednesday afternoon trading.
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The latest word out of Washington, from multiple sources talking to Politico, is that the lawsuit that could break up Amazon might hit courts as early as next week. The complaint around which the lawsuit is based is, actually, pretty sound based on what we’ve all been seeing for the last 10 years or so: the FTC believes that certain Amazon Prime practices essentially force merchants to use the advertising, logistics, and other services that Amazon provides, which doesn’t do much for competition.
Should a court agree, several outcomes could follow. One—and potentially the most catastrophic—would be to break Amazon into several smaller companies, each with a different focus. Already, Amazon has been fighting off similar action in the U.K., where the Competition and Markets Authority has put Amazon through its paces in terms of its Marketplace platform. However, Amazon made overtures about changing some of those practices, and the CMA appears amenable so far. Even if the court case—or likely subsequent appeals—doesn’t go Amazon’s way, it may still be able to win a lesser win in the settlement.
Either way, analysts are clearly on Amazon’s side. With 37 Buy ratings and one Hold, Amazon stock is considered a Strong Buy by analyst consensus. Further, Amazon stock offers a 14.27% upside potential with its average price target of $145.77.
