I talk a lot about the fall of Amazon in my latest book. Everybody wants to believe the company they invest in or try to get a job in “because it is cool” will be around forever. Here’s a tip.
There are no forever stocks anymore.
If I’ve said it once I’ve said it a thousand times.
Amazon is now where Sears was when Sears built the tower in Chicago.
Both groups built a testimony to the size of their manhood, both groups took their eyes off the ball, both companies went into a relentless downward spiral. This $3.8 Q1 loss isn’t “just a bad quarter.” It’s the first troubling illness that an AIDS patient gets. Remember, Sears once owned the catalog business. Around the time they built the tower they failed at catalog and closed it down.
Despite all of the hype in the press and on Wall Street, Amazon is a pretty shitty place to work. How can I make that statement? Really great places to work don’t have union votes. Amazon has a lot of them with many more on the way. Even Bernie Sanders is joining the fight!
It’s the Cycle
This continues to happen with every massive retailer. There is a sweet spot to retailer size that no board of directories or Wall Street investor seems to realize. Get just one bit bigger and the ego really does run amuck. You start pissing customers off right and left. Stories start leaking out about the working conditions. Next thing you know people won’t buy from you anymore and banks won’t loan you money.
Won’t be long before you have a “turn-around expert” come in slashing staff and wages yet demanding a massive compensation package. They begin selling off everything that isn’t nailed down. How many of you reading this remember that Sears created Discover Card? Craftsman, DieHard, and I can’t even begin to count how many others were “Sears brands.”
You will find lots of different armchair analysis as to why Sears went (mostly) under. The bottom line is upper management became more interested in showing the world the size of their manhood than in running the company. Sears built a tower to show the world the size of their manhood. Bezos/Amazon built a rocket.
Dumping Amazon
Hey, I’ve played The Dead Cat Bounce before. Many times. You have to wait for the cat to actually hit the pavement first though. It’s almost always a short-term (less than 3 weeks) play. I’ve never seen the Dead Cat climb the corporate ranking ladder again. At least not without brutal 100+ shares to 1 reverse splits decimating shareholder value.
That even goes for JC Penney. I bought a 100 shares of that when it was around/under $2/share. The symbol was wiped from the books. I got nadda for that 100 shares. Gotta really suck for the holder of 100,000 shares or more. The new owners of JC Penney actually know something about retail. They catered to the loyal customer base, dumped a lot of expensive mall locations, and now they are buying Kohl’s.
Smart money gets out of a company when it shows the first signs of having contracted Corporate AIDS. There is no vaccine for that. The patient just dies. Sometimes it lives on in a vegetative state like Sears but generally it just dies.
How many of you still have products from Fretter Appliance? How many of you remember that Builder’s Square was started by K-Mart?
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