Amazon Shares Slide Amid Legal Troubles and Downgrade Pressure

Amazon shares faced selling pressure after a federal judge allowed the Federal Trade Commission (FTC) to move forward with an antitrust lawsuit, and a downgrade by Wells Fargo added to the downward trend. Analyst Ken Gawrelski reduced Amazon's stock rating to Equal-Weight and lowered the price target from $225 to $183, citing increased competition and slower growth. The judge’s decision came as part of a broader scrutiny into Amazon's practices, with allegations of inflating prices and suppressing competition.

The FTC's lawsuit accuses Amazon of abusing its marketplace dominance, an issue that could potentially lead to a 2026 trial. Some state claims against Amazon were allowed, although claims from New Jersey, Pennsylvania, Oklahoma, and Maryland were dismissed. This legal scrutiny adds pressure on Amazon, which is already dealing with market apprehension about its future profit margins.

In response to these challenges, Amazon is planning strategic changes to reduce costs and increase efficiency. Reports suggest that CEO Andy Jassy aims to cut 14,000 management positions by early 2025, potentially saving around $3 billion annually. This restructuring aligns with Jassy's strategy to boost operational efficiency by increasing the ratio of regular employees to managers.

Meanwhile, Amazon announced a return-to-office policy, requiring employees to work from the office five days a week starting January. This move is part of Amazon's broader effort to streamline operations and foster a more collaborative work environment.

As Amazon navigates these internal and external challenges, its capacity to adapt and innovate will be crucial. The company's response to legal pressures and organizational restructuring will likely play a significant role in its future market performance and competitive positioning.