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Amazon (AMZN) stock has been experiencing a surge after the company announced that it is suspending its third-party delivery service due to an increase in demand from its customers. UPS and FedEx shares rallied on the announcement as they will become the alternatives.
Amazon.com Inc (NASDAQ: AMZN) stock has been experiencing a surge causing investors to flock in large numbers. The shares have become among the best coronavirus stocks that are rising with time. On April 9, 16:00 EDT, the shares were trading at $2042.76, which was a drop of $0.24, approximately 0.012%. However, if we look at figures we can see that despite the drop, AMZN stock is still trading nearly 7% higher than, for example, 5 days ago. On April 6, it started the day at $1895.
The surge is a result of the high demand for its services by most people, already staying at home due to coronavirus. The demand for home essential delivery has been so huge that the company announced that starting from June, it will be suspending its third-party shipping program.
Previously in mid-march, the company had announced that it will only be receiving essential items in its warehouses for the third-party merchants. However, it now seems the surge in its delivery products has risen to a tipping point, where it can no longer support third-party merchants.
According to a post from WSJ, it cited that Amazon has a serious capacity problem, and the suspension of Amazon Shipping will give it a chance to deliver to its customers with much ease. In the past, merchants have been taking advantage of the excess capacity in Amazon’s fulfillment network. As a result, Amazon has been benefiting financially from the program.
Amazon has been at the forefront of delivering groceries and other essential household items, as social-distancing efforts keep more people locked at their homes. The company is betting big that the surge in its services will increase and in turn generate more income, which will reciprocate to the stock value skyrocketing.
FedEx and UPS Stock Rally with Amazon Stock
As of Wednesday, FedEx Corporation (NYSE: FDX) shares rose to a week high, about 8%, while shares from the United Parcel Service (NYSE: UPS) rallied approximately 6%.
The rise is attributed to the surge in demand for their services after Amazon announced the suspension of its Amazon Shipping. Most merchants were using Amazon shipping since it charges less than UPS and FedEx.
Their shares will become a huge beneficiary of the coronavirus crisis, where more people are ordering from online retailers. At the time of writing, FDX shares were trading at $122.29 while the UPS shares were trading at $98.69.