Amazon’s stock price performance is not as good as last year
If investors pay attention to the stock price of US stock Amazon (ticker: AMZN), they should clearly feel that Amazon’s stock price performance this year has not been outstanding (compared to last year’s fierce rise, it is simply not the same). Investors may worry about whether the competitiveness of the company has declined. You will get the answer after reading this article. Our article does not discuss Amazon’s stock price performance, but to look at Amazon from another angle.
Visa and Mastercard
According to survey data from payment giant WorldPay, credit card payment account for one-third of North American e-commerce spending in 2020.
Not long ago, on 11/18/2021, Amazon announced that it would cancel the payment option of Visa (ticker: V) in the UK. The Visa stock price fell by 6.5% within a day (you may think it’s okay! But it’s rare for Visa stock price to drop more than 3% in a day). On the same day, Mastercard’s (ticker: MA) also fell by more than 5% (this kind of decline is also not usually for the Mastercard stock), causing the share price of PayPal (ticker: PYPL) to drop below US$ 200. The Chief Financial Officer of Visa immediately told the media that it would resolve the dispute with Amazon on the handling fees.
In the past, Visa and Mastercard were relatively strong, and Amazon had to bow its head because consumers had few payment options. However, after more than ten years of financial technology companies have introduced various convenient payment methods, plus the new BNPL latest credit and payment method that has emerged in the past two years. Amazon no longer has to look at the faces of Visa and Mastercard, and canceling the payment option of Visa on the British Amazon website is just one of the means to force Visa and Mastercard to reduce the handling fee.
For details, please refer to another special article I published a few days ago, “Why has PayPal’s stock price plummeted by nearly 40% from its peak?” focus on Amazon’s impact to PayPal.
Since Affirm went public in January 2021, its stock price has fallen all the way. As of 8/26/2021, a total of 30% has fallen, and the decline seems to have no end to the downtrend.
8/27/2021 Amazon announced that Affirm is the “only provider” on its platform that enjoys BNPL services afterwards. Had it not been for Amazon to announce the establishment of a cooperative relationship with it, Affirm’s stock price might still be hovering at a low level. This announcement by Amazon has been up almost in a straight line in less than three months so far, and its stock price has risen by 100% (see the picture below, from Google Finance).
I once introduced this company in this blog that everyone in the US knows, the well-known listed company Fair Isaac (ticker: FICO) in the consumer finance industry. Investors will find that this seems to be a highly competitive company, but the stock price of this year has been contrary to the past normal. Since this year, the stock price has fallen 29.24% this year, and it continues to hit new lows. (As shown below, from Google Finance)
There is no other reason. The way of consumer finance credit has undergone the earth-shaking siege of financial innovations (Fintech) in recent years, and the financial landscape has undergone fundamental changes (see my other article “What caused Citi to abandon its retail banking business in 13 countries“), the degree of reliance on it is gradually declining.
Amazon’s economic scale
From the above discussion, it is fully proved that Amazon’s economic scale is strong enough to determine the survival of many listed companies (please note; Amazon’s own stock price, at the same time, is better, but has not changed significantly).
Changes in stock prices of related companies this year
The following is from Charles Schwab, all the companies mentioned in this article, stock price trends this year.
In the graph, we only see two have positive returns: Amazon rose by 17.81%, and Affirm rose by 40.07%. And all other companies are all negatively performed.
- “The differences between Visa and Mastercard?“
- “Has the moat of ubiquitous credit card networks loosened?“
- “Amazon’s dominance from stock price trends of PayPal, Affirm, Fair Isaac, Visa, and Mastercard“
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