The stock market didn't see a lot of movement on Thursday morning, as investors seem content to tread water until some key issues start to resolve themselves. Trade disputes still loom as a potential threat to the bull market, although many are hopeful that a resolution is possible. Earnings season is also about to begin, with some bracing for weaker bottom-line growth than in 2018. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 25 points to 26,182. The S&P 500 (SNPINDEX: ^GSPC) gained 3 points to 2,891, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) rose 2 points to 7,967.
Shareholders in Amazon.com (NASDAQ: AMZN) got their annual letter from CEO Jeff Bezos, and it included some useful information not just about the e-commerce and cloud computing giant, but also about broader thinking about the current state of the business community. At the same time, Rite Aid (NYSE: RAD) announced an effort to remain on the New York Stock Exchange by executing a reverse split of its stock.
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How Amazon keeps moving forward
Amazon.com's stock was little changed Thursday morning as investors got their chance to peruse the latest annual installment of its CEO's letter to shareholders. Yet what Bezos said has dramatic implications for the future of Amazon's business.
Bezos highlighted several key trends. Despite strong growth in its own retail business, Amazon has seen third-party sellers grow to be an even larger part of its overall e-commerce sales, justifying the investment the company made in that side of the business. Meanwhile, Bezos sees machine learning becoming an increasingly important service it can offer clients of Amazon Web Services, along with database products and other IT services. The CEO also pointed to Amazon Go as part of the future of retail, with its checkout-free experience revolutionizing how people shop.
More broadly, Bezos noted that several of Amazon's most successful offerings were things that customers hadn't actually asked for. Along the way, Amazon produced some monumental failures -- but Bezos accepts the greater scale of failure as the necessary price for a greater scale of success. With efforts to ramp up use of Alexa-enabled devices and its recent boost to its minimum wage for employees, Amazon is trying to move forward on multiple fronts and hopes to see the same positive results it's enjoyed throughout most of its history.
Rite Aid goes into reverse
Shares of Rite Aid plunged 11% following two news releases from the drugstore retail chain. Late Wednesday, the company said that it would do a 1-for-20 reverse stock split, essentially cutting the number of shares every shareholder owns by 95% but boosting the per-share price 20-fold. By doing so, Rite Aid hopes to comply with New York Stock Exchange rules that require companies to maintain prices above $1 per share. After the reverse split takes effect on April 22, the number of outstanding Rite Aid shares will fall from more than 1 billion to just 54 million.
Separately, Rite Aid released fourth-quarter financial results Thursday morning that included more net losses and a modest drop in revenue. CEO John Standley blamed a mild flu season for part of its sluggishness, but he was optimistic about a rise in immunization activity, Medicare Part D membership, and continued efforts to become more healthcare-oriented in its operations.
The track record among companies that have had to resort to reverse stock splits in order to meet NYSE listing requirements is far from stellar, but there have been some that have managed to beat the odds. Rite Aid still faces an uphill climb as it aims to make the most of its remaining network of drugstore locations, and shareholders will need to see more signs of potential success before they'll be able to buy in fully to the bullish case for the company.
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