Amazon dominance will backfire, Fmr. Walmart USA CEO says
Former Walmart (NYSE:WMT) USA CEO and President Bill Simon explained to FOX Business’ Stuart Varney that he will not be buying stock in Amazon (NASDAQ:AMZN) and that the company is growing at too quickly a rate.
“There’s only one direction for that stock to go Stuart, and I think everybody knows that. I can’t tell you when it’s going to happen, but it’s inevitable,” said Simon.
Simon tells FBN that while Amazon’s sales are up 17%, it is losing money following its acquisition of Whole Foods (NASDAQ:WFM).
“Their ability to keep putting up these massive numbers is going to run into difficulties the bigger they get,” Simon said.
He compared Amazon’s ability to grow to that of Walmart’s.
“The growth will have to slow just by the law of large numbers, and Walmart’s a great example. At nearly $500 billion [in annual revenue] Walmart can grow, you know in order to grow 10%, Walmart would have to grow $50 billion in a year,” said Simon.
Last year, Amazon made $900 million in web services, but lost $300 million in retail. Simon said that it is using web sales to fund aggressive pricing for retail.
Amazon’s second-quarter earnings report, which was released on Thursday, revealed profits had dropped 77% from the year-ago period. This company’s stock was down over 3% during mid-morning trading on Friday.