Equities report: Amazon in trouble?

US stock markets continue to present some volatility, with the NASDAQ 100, DOW JONES 30 AND S&P 500 appearing to be moving in a downwards fashion since the beginning of this week. We recognise that there are a number of fundamental factors that could affect US and European stock markets and we are to discuss the fundamental environment surrounding Amazon, UBS and Tesla and end the report with a technical analysis of Amazon’s stock price.

Amazon(#AMZN) against the FTC

The Federal Trade Commission announced yesterday that it had filed an antitrust lawsuit against Amazon. The FTC is claiming that the company has used its monopoly power to overcharge consumers whilst minimizing competition and taking advantage of sellers on its marketplace through fees. The FTC also claims that “Amazon has hiked so steeply the fees it charges sellers that it now reportedly takes close to half of every dollar from the typical seller that uses Amazon’s fulfilment service”. Moreover, the FTC also claims that Amazon punishes. sellers that discount heavily by “hiding” them from its search results and re-directive traffic to more “expensive products”. The lawsuit could potentially weigh on the stock as the company may be forced to re-organize its business practices, by increasing competition on its platform, which could weigh on the company’s profits in the long run , as their perceived extravagant cost and degradation of services may need to be altered and as such could hurt the company’s bottom line, which could potentially weigh on the company’s stock price. However, we should note that the complaint by the FTC, was expected by market participants may have been expecting, the FTC to take further action against Amazon, following another complaint which was filed in June, upon which, the FTC accused the company of enrolling customers in Amazon Prime without consent and sabotaging their attempts to cancel.

UBS challenges €1.8B penalty in France

UBS is attempting to overturn a court decision in France, upon where it may be forced to pay €1.8B for allegedly aiding and abetting illegal customer acquisition and money laundering in regards to its French clients. Furthermore, we should note that the court case has been going on for the better part of a decade and in 2019 UBS (#UBS) was convicted for the first time and ordered to pay €4.5B.  The company is attempting to overturn the decision which could potentially cause enormous reputational damage for the company should the court’s decision be upheld. In addition, the timing of the appeal may place stress on the bank given that it is still undergoing the behemoth task of integrating and absorbing Credit Suisse and as such, could weigh on the bank’s stock price. However, given the fact that the allegations have been made public for the better part of a decade, as we mentioned previously, it may not have a significant impact on the bank’s reputation but rather on its balance sheets and as such could weaken the bank’s quarterly earnings in the future.

TESLA (#TSLA) under fire in the EU for the subsidies it receives in China

Tesla is under fire in the EU over the subsidies it has been receiving by the Chinese Government. According to a report by the  FT, Tesla and other European carmakers that export from China to the EU are set to come under scrutiny, as the bloc is investigating as to whether or not the country’s electric vehicle industry is receiving unfair subsidies. In the event that Tesla is deemed to have unfairly benefited from subsidies from the Chinese Government, we may see actions taken by the EU bloc in order to increase competition  and such a measure could be to tax EV imports from China into the EU, which in turn could potentially weaken profits for companies affected by such a potential measure and as such could weigh on their stock price. However, it is of vital importance that we note that the bloc has yet to release its findings nor state any potential measures and as such the scenario given above, is purely based on a theoretical perspective.

テクニカル分析

Amazon (#AMZN), 4-Hour Chart

Support: 124.20 S1), 117.50 (S2), 109.30 (S3)

Resistance: 130.75 (R1), 137.90 (R2), 144.60 (R3)

Amazon (#AMZN) appears to be moving in a downwards fashion, with the stock aiming for the 124.20 (S1) support level. The extreme widening of the Bollinger bands imply high market volatility in the market and as such the stock may be due for a slight market correction to higher ground, before potentially continuing on its downwards trajectory. Despite this, we tend to maintain a bearish outlook for the company’s stock price and supporting our case is the RSI Indicator below our 4-Hour chart which currently registers a figure of 30, implying a strong bearish market sentiment. For our bearish outlook to continue, we would like to see a clear break below the 124.20 (S1) support level, with the next possible target for the bears being the 117.50 (S2) support base. On the other hand, for a bullish outlook we would like to see a clear break above the 130.75 (R1) resistance level, with the next possible target for the bulls being the 137.90 (R2) resistance ceiling.

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