Online shopping giant Amazon (AMZN) has faced competition before. Now, however, it is facing new competition from an unlikely source: TikTok. Investors appeared unfazed by this news, and sent shares up modestly afternoon trading.
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The new competition comes from TikTok Shop. This may seem odd given that TikTok is likely to be banned in the U.S. Well, as it turns out Amazon is losing ground with its own sellers, and even its own employees. TikTok has been actively poaching both Amazon sellers and Amazon employees, offering lower fees for the sellers and better deals for the employees.
TikTok has made it clear that it is a big name in advertising, which could potentially draw more customers to sellers’ doors. With that, plus lower fees, that could be enough to get plenty of businesses interested, even if a ban on TikTok in the U.S. goes live on January 19, as some forecast will happen. However, TikTok may end up saved under the incoming Trump administration.
Labor Troubles Continue
Separately, Amazon’s labor troubles continue. The Indian state of Haryana is suing Amazon over conditions at a warehouse, or “fulfillment center,” near Manesar. Reports note that employees at the facility were “…asked to take verbal pledges not to take breaks, including for drinking water or using the toilet, until they met their targets for the day.” Amazon has called that report “unfortunate and isolated.”
A documentary about conditions at Amazon, called Union, may have won awards at Sundance, but it had a hard time finding distribution. Amazon Studios’ market power kept many from purchasing the award-winning film, but reports note that did not stop it. Union made an appearance on an independent platform called Gathr recently.
Is Amazon a Good Long-Term Investment?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 45 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 45.17% rally in its share price over the past year, the average AMZN price target of $239 per share implies 13.67% upside potential.
