Can it be Amazoned? Cannot it not be Amazoned? Can it beat Amazon (AMZN) ? These are the questions behind so much of today's market that it is almost eerie that one company could play such a big role in both the U.S. economy and the stock market.
Consider that many insiders think the motivation for either Comcast's (CMCSA) or Disney's (DIS) interest in Fox (FOXA) is that Amazon could have more scale than the suitors have unless they bulk up and make acquisitions. I can't say they're wrong; Amazon has enough money to make anything happen.
Consider that Google (GOOGL) , Microsoft (MSFT) and IBM (IBM) are all desperately trying to take customers from Amazon Web Services because it is the acknowledged leader in the business and can take on all comers. (Comcast and Google are part of TheStreet's Action Alerts PLUS portfolio.)
Consider that some retailers have been decimated by Amazon and all retail stocks have been sold down because of the power Amazon has to destroy any bricks-and-mortar store it trains its guns on.
As the legendary cable operator John Malone told David Faber yesterday: Amazon is a "death star" moving in "striking range of every industry on the planet."
What makes Amazon so powerful? Is it the unlimited capital it seems to play with? Is it the vision of Jeff Bezos, its founder? Is it that it's not hobbled with bricks-and-mortar stores and all of their accoutrements, including expensive mall rents and massive labor costs?
I think it's all of those, but what's really at stake here is that the consumer loves Amazon. The consumer pays for Prime and Prime allows for the most convenient, quickest, best way to get pretty much anything.
Consider the incredible price-to-earnings multiple shrinkage, or what we will pay for the drugstores because Amazon has periodically expressed interest in being in that business. CVS (CVS) and Walgreens (WBA) , two good operators, have seen their stocks shredded because of these rumors.
I say it makes sense. The front of the store is already covered by Amazon. I have a drugstore literally about 400 yards away and I would never get anything from the front of the store anymore, especially bulky things like toilet paper and paper towels. I order online.
If I had the ability to get my prescription drugs sent same day to me after my doctor emails the Amazon pharmacy, I would transfer in a heartbeat. I can't think of a person who gets much out of a pharmacist these days. It's not like years ago when they were integral to the calling. They are largely factotums now as these big chains have wiped out the corner drugstore. We would do anything not to have to go to them.
I do believe Amazon can't destroy or, for that matter, buy everyone, something that happened when Amazon picked up Whole Foods (WFM) . That initiative has crushed the valuations of all the supermarkets and the food companies. The presumption is that Amazon can take on anyone in food because of that acquisition, but this week we learned that Walmart (WMT) isn't being cowed. Fifty percent of Walmart's sales are food and it is growing its online business at 50%, making it a formidable competitor on its own right, and it does have 10 times the store base of Amazon.
That said, Citi put out some research today talking about all of the various retailers Amazon could buy, and included in the list would be Kroger (KR) . If that happens, I do think Walmart's stock will shed some of those 10 points it made yesterday.
Have we gotten to the point where we live in too much fear of Amazon? I don't think so, even as today's retail rally is as much of a momentary relief from Amazon's tyranny as it is a huge short-covering story.
I, for one, just want to remind you, though, that as long as Amazon continues to provide better goods at a better service, everyone's right to be afraid. Be very afraid.
