Some investors have fallen into a state of delusion in my opinion.
Call it Amazonitis.
Both have lost plenty of market value in the last few weeks after Amazon announced its purchase of Whole Foods (WFM).
Amazon recently released a new program called Amazon Prime Wardrobe and investors dumped shares of all manner of fashion companies.
In my view, Amazon’s 40% share price increase this year calls for a healthy dose of skepticism.
There’s no question Amazon is a juggernaut and its Amazon Prime service, with over 50 million subscribers, is formidable for the value it brings to consumers.
That said, there’s a lot of overcapacity at malls and retailers are closing huge numbers of stores.
In my opinion, much of the industry carnage is self inflicted by management teams who believed wrongly that their site selection was impervious to competitive forces.
Secondly, investors make decisions based on performance and quarterly results.
If retailers can begin to claw back market share, you may see a different attitude among investors.