Shares of Amazon continued sliding Thursday morning, down about 3.5% at 10 am, after falling as much as more than 7% on Wednesday.
Wednesday’s plunge came from a single headline which reported what we already knew: Trump hates Amazon. “Trump’s wealthy friends tell him Amazon is destroying their businesses. His real estate buddies tell him – and he agrees – that Amazon is killing shopping malls and brick-and-mortar retailers,” according to Axios.
The real story here is that investors see America steaming toward an era where the great tech giants are regulated as what they are akin to: utilities.
As Asia Times columnist David Goldman wrote last year, tech companies already trade like utilities, but ones that are not regulated. “The world officially went topsy-turvy this year when the volatility of tech stocks fell below the volatility of utility stocks,” Goldman noted.
It’s increasingly clear that regulation is only a matter of time. Goldman weighed in again this week:
“Both the Democratic Party and the nationalist wing of the Republican Party think that the likes of Google and Facebook should be regulated like public utilities, which would mean a sharp drop in profits. So apparently does the European Commission.”
When the dust settles, tech companies will likely still trade like monopolistic utilities, but until then every chink in the armor will call pricey valuations into question. Including a Trump tweet, such as the one this morning, that is not backed up by specific policy proposals:
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018