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Amazon’s (NASDAQ:AMZN) Robotaxi Service Under Investigation Following Crashes
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Amazon’s (NASDAQ:AMZN) Robotaxi Service Under Investigation Following Crashes

Story Highlights

Amazon comes under regulatory scrutiny for its robotaxi service, while its automated delivery drones go on strike in high heat.

Free AMZN Analysis

As exciting as the idea of self-driving cars is, it just doesn’t seem to be working out really well right now. E-commerce giant Amazon (NASDAQ:AMZN) is the latest entrant in the field, and now, the National Highway Traffic Safety Administration (NHTSA) is investigating its Zoox robotaxi service following two crashes. Investors didn’t take the news well and sent Amazon down fractionally in Monday afternoon’s trading.

Amazon’s robotaxis, in the form of Toyota Highlanders packing Zoox’s self-driving technology, developed an unexpected glitch in two separate cases recently. Both cases featured the cars braking unexpectedly, causing motorcyclists behind them to crash into the cars that suddenly became obstacles in normal traffic flow.

Interestingly, both incidents took place during daylight hours, and both were “within the operational design limits of Zoox’s autonomous system.” The investigation will cover 500 vehicles, so two out of 500 doesn’t sound so bad. But this could be a sign of larger problems to come.

Delivery Drones Strike on Hot Days

Meanwhile, Amazon is finding that even automated drones can cause labor troubles. Reports note that the rollout of delivery drones in Arizona is proving troublesome, as the robots refuse to work in hot weather. The drones can’t actually operate in temperatures over 104 degrees Fahrenheit, reports note, and given that Arizona sees that kind of heat for roughly a quarter of every year, it’s proving to be a bit of a problem.

Worse, Amazon also revealed that its Lockeford, California, Prime Air operation is being shut down after running for two years. With only a couple thousand deliveries to its credit, it’s clear the unit wasn’t up to snuff.

Is Amazon a Buy or Sell Right Now?

Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 41 Buys assigned in the past three months, as indicated by the graphic below. After a 67.38% rally in its share price over the past year, the average AMZN price target of $220 per share implies 18.08% upside potential.

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