Amazon (AMZN) Stock Drops After Hours as Coronavirus in China Threatens Amazon Sellers

On Feb 27, 2020 at 11:21 am UTC by Tolu Ajiboye · 3 min read
Amazon (AMZN) Stock Drops After Hours as Coronavirus in China Threatens Amazon Sellers
Photo: Shutterstock

Amazon (AMZN) stock has been already seriously hit by the coronavirus and things might get a lot worse for the e-commerce giant very soon if nothing changes.

Many companies, regardless of their size, are still reeling from the general effects of the coronavirus. These companies are having a hard time controlling losses and maintaining their normal core functions as the epidemic continues to spread. Since the coronavirus has been worsening, the markets have been taking a much deeper plunge and Amazon.com Inc (NASDAQ: AMZN) stock has suffered quite terribly as a result and plunged after hours.

Coronavirus Crashes Amazon (AMZN) Stock

Amazon is easily the world’s largest e-commerce business with co-founder and CEO Jeff Bezos as the richest man in the world. The company’s inventory has a very wide range of products numbering over a hundred million with a significant portion of them from China. Data from e-commerce analytics company Marketplace Pulse says that 49% of all the top sellers on Amazon are in China. With the continuous spread of the coronavirus, this is a huge problem for Amazon and its stock. The dependence on China is about to blow up in the company’s face.

Adding to this, it is also common knowledge that many of the top sellers who are not in China also benefit from the country. A lot of these sellers take advantage of the low prices from sourcing Chinese goods and make significant profits selling on Amazon. With a potentially dangerous dent looming in the supply chain, the company’s stock could plunge even deeper.

Amazon (AMZN) stock at closing on Wednesday was at $1,979.59 after gaining 0.35%. In after-hours trading, however, it lost a few more points and fell to $1,968 (-0.59%). These figures are a lot more disappointing especially considering that about a week ago, AMZN was trading at $2,173. It has now lost about 9.5% in one week.

Manufacturing Will Also Affect Amazon Stock

A kitchen products vendor in Michigan Patrick Maioho, believes that manufacturing is about to become a serious problem for Amazon. He said that one of his Chinese business partners has told him that things are going to get worse. Basically, factories are still closed. Also, even if they open, there will not be a lot of activity because many provinces have also ordered people indoors. He said:

“I don’t think the Amazon platform has seen such a massive amount of inventory problems as we are about to see.”

Coronavirus or not, people will stop looking to Amazon if they find that their overall inventory is reducing. If Amazon cannot hold its position for much longer, its stock will continue to crash.

Should You Consider Walmart Instead?

At a time like this when Amazon is taking the heat, a competitor like Walmart Inc (NYSE: WMT) should be taking advantage. However, it might not be as simple.

Firstly, Walmart simply does not record the kind of sales traffic Amazon enjoys. The company recently released a disappointing earnings report and said that the figures were bad because its holiday season was much lower than expected. Analysts’ estimated $142.55 billion but the company reported $138.79.

Also, the figure was still a 2.1% growth from a year ago. However, Amazon’s 20.8% growth completely dwarfs that of Walmart.

Finally, the coronavirus is not exclusive to Amazon (AMZN) stock and could affect Walmart and pretty much any other company.

Business, Markets, News, Stocks, Wall Street
Tolu Ajiboye
Author: Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

Share this article

Related Articles