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Update December 13, 2018- A retail market data tracking company is reporting that other retailers are taking market share away from Amazon. Numerous stats are down this year. The total percent of online sales handled by Amazon has dipped 10%. See below for the full essay predicting this in March.
Also, I live by an upscale traditional shopping mall. It is booming with business. People like to see what they buy and traditional stores have made it easier to return items.
All of this could be why Jeff Bezos is making public statements warning that Amazon “will go bankrupt” at some point.
Update October 27, 2018- Amazon reported disappointing earnings and forecast numbers. The stock tanked on Friday causing Jeff Bezos to lose $14 Billion in personal wealth. The stock is down 20% from all-time highs reached earlier this year.
Read below for my thesis on why Amazon is a long-term short (Tesla has a more optimistic future now than when this essay was first written).
Update October 14, 2018- Tesla has surprised me. They are suddenly pumping out 30,000 Model 3’s a month. I am seeing the on the road. Meanwhile, the other carmakers are two-years away with their own models. Tesla is over-shorted. Look for short covering and this stock to rebound.
Update March 28, 2018- I told you so. Both Tesla and Amazon shares are down big, for the reasons I listed below. Trump is threatening Amazon’s tax structure, as I predicted, and Tesla cannot make cars well, as I predicted.
March 10, 2018- by Steven E. Greer, MD
Within the last week, out of principal, I have returned two items purchased on Amazon. One was a music CD that arrived unwrapped and was clearly used. The return address was to an individual at a home address. The other was a batch of normal mail envelopes, clearly stolen from a larger batch and repackaged in cheap plastic wrap.
Amazon has a terrible problem of allowing any third-party vendor to sell overstock or stolen items. eBay was the first online shopping venue to allow this.
Customers will not tolerate this for much longer. The only reason that Amazon exploded in size was because they sold goods without state sales tax, and that policy was discontinued.
Amazon has also been exposed as yet another Big Tech company incapable of running a real bricks and mortar store. They acquired a fully operational Whole Foods last year and immediately ran it into the ground.
Meanwhile, competition, such as from Walmart and many other retailers that were hit hard by the Amazon disruption, are getting better at online shopping. They are shipping and too have no-questions-asked returns just like Amazon.
Within two-years, look for Amazon to begin reporting stagnant growth in revenue. For a tech company, that will be a serious problem driving down market cap valuation.
If President Trump were to retaliate against Amazon owner Jeff Bezos, who has been a vocal member of the resistance, purchasing the Washington Post and turning it into a propaganda outlet, then Amazon would really be in trouble. Trump could do many things, ranging from breaking up the company to simply ceasing the cozy deals that Amazon has struck with the U.S. Postal Service.
Amazon is not the only Big Tech company at risk of struggling in the near future. Tesla simply cannot manufacture cars well. The long-awaited roll out of the “affordable” Model 3 was a bust due to battery problems from the Reno plant. Now, reviews are indicating that the assembly line is producing shoddy work. The Model 3 is also ugly and poorly designed. The traditional car companies all have electric cars coming out in 2020. VW is investing billions in battery production.
The bigger picture is that the Silicon Valley tech culture is one of millennial narcissism and lack of discipline. A prime example can be seen in the “mission control room” of SpaceX. It is staffed by 20-somehtings who think they are cool for wearing super casual clothes into a space launch room, cheering wildly prematurely as the rockets are in mid-flight (too young and dumb to recall Space Shuttle Challenger blowing up). No human should ever go aboard a SpaceX rocket. NASA needs its own human flight program.
Silicon Valley culture is simply not conducive to boring manufacturing of real products. One cannot “change the world” by making real things. Making stuff is very difficult, requiring real educations.
Amazon cannot even figure out how to run an existing grocery store business that it acquired. Tesla’s Model 3 has been a disaster. Google bought Motorola for $12.5 Billion and could never make its own line of smartphones. They sold it for $2.9 Billion.
Even hardware company Apple is finding it tough to make stuff. The company has been unable to expand into electric cars or TV sets. New versions of the iPhone are failing miserably.
Amazon, Apple, Google, Facebook, Tesla, etc. are all poised to have stagnating growth in the near future. The Silicon Valley culture of easy money from apps will cause any attempt to manufacture goods, or grow beyond social media, to fail.
Making matters worse is the “tech lash” growing over invasive data gathering by Amazon, Google, etc. It would be politically popular to break up and regulate these companies.
On March 27th Moody’s downgrades Tesla’s bond ratings. The downgrade (to well below investment grade levels) reflected Moody’s concern over capital needs and production difficulties.