Credit Suisse seeks 'silver bullet' for Amazon, finds 'sticks and stones'
Credit Suisse analyst Stephen Ju conducted a sensitivity analysis to examine the potential range of outcomes for Amazon (AMZN) in the event of a USPS price increase, saying that while he was looking for a "silver bullet," he found "only sticks and stones." In a research note to investors, Ju said he went into the analysis seeking a possible "silver bullet" which may disrupt the level of service given Amazon's dependency on the UPS to push its consumer value proposition, adding that the current assumption is that USPS accounts for about 40%-50% of Amazon's shipping cost in the U.S. Ju said he arrived at about $1B-$1.8B in potential incremental shipping costs this year that Amazon may decide to absorb, or it could pass some, if not all, of the incremental costs onto the consumer via a Prime price hike. He believes the pullback in Amazon shares has more to do with devaluation of its megacap Internet peers, including Facebook (FB), versus the new round of tweets from President Trump which highlighted the reliance Amazon has on the USPS. AMZN FB