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CPSC Sues Amazon for Selling Hazardous Products
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CPSC Sues Amazon for Selling Hazardous Products

The U.S. Consumer Product Safety Commission (CPSC) has sued Amazon (AMZN), accusing the e-commerce giant of selling products that pose a danger to people.

The CPSC voted 3 – 1 to approve the lawsuit against Amazon. The consumer products safety watchdog wants Amazon to stop the sale of the items it has determined to be hazardous. It also wants the online retailer to recall potentially dangerous products it has sold and fully refund the customers who purchased them. (See Amazon stock charts on TipRanks).

“Today’s vote to file an administrative complaint against Amazon was a huge step forward for this small agency…we must grapple with how to deal with these massive third-party platforms more efficiently, and how best to protect the American consumers who rely on them,” said Robert Adler, the commission’s acting Chairman.

The CPSC has named several specific products that Amazon sells that it says pose the risk of serious injury or death to consumers. These include hair dryers that can electrocute people and carbon monoxide detectors that don’t do their job.

The agency acknowledges that Amazon has already taken some action regarding the hazardous items. However, it says Amazon’s actions are insufficient, hence the decision to sue. The CPSC says deaths, injuries, and damages that arise from faulty consumer products costs the U.S. more than $1 trillion annually.

On July 9, Argus analyst Jim Kelleher reaffirmed a Buy rating on Amazon with a price target of $4,000. Kelleher’s price target suggests 10.16% upside potential. The analyst cited the recent executive changes at Amazon and the Pentagon’s decision to cancel the $10 billion cloud contract it had awarded Microsoft in reiterating the bullish view.

“Amazon.com has begun a new era with Andy Jassy as CEO…Jassy is one of the founding architects of Amazon Web Services, and, as such, has deep experience with what is by far Amazon’s most profitable business. A potential downside could emerge if Congressional action forces Amazon to divest its AWS business,” commented Kelleher.

Consensus among analysts is a Strong Buy based on 32 Buys. The average Amazon price target of $4,299.35 implies 18.40% upside potential to current levels.

AMZN scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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