Amazon – Slow and steady does it

AMZN shaved nearly $50 of its stock price between late July and early August. Amazon is showing movements into the mature era of its business and looking at new areas of growth whilst making the scalability play on its suppliers. Whilst they continue to fight Hachette on pricing on e-books they are also embroiled with the Walt Disney Company on pricing of DVD’s. Amazon is seeking free play on pricing as the arrangement is currently with Warner. Investors are dumping some stocks as Amazon is using stand off tactics by blocking preorders on Captain America: The Winter Soldier, Maleficent and Muppets Most Wanted. This standoff is hurting Disney as the cash flow and pre-order business on the number 1 and numbers 4 films in the US domestic office this year are a big cash grab opportunity. Hachette is accusing Amazon of delaying shipping on its products and eliminating and reducing discounts on their items. The ransom is likely to work in the long term as Amazon distribution arm is critical for Disney and Hachette. Amazon firmly believes that both the e-book and DVD business needs to see a period of price reduction which will help the industries build lost traction. Hachette Publishing and Disney have expressed opposing views and do not believe the reduced cost of production and distribution constitutes enough reason to price drop.

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