Amazon’s stock slipped 1.2% on Tuesday, despite bullish sentiment from Bank of America analysts around Q3 year-over-year spending trends.
The company’s shares, which are down 4.3% this month, have been trying to regain momentum, as Amazon ramps up e-commerce and logistics engines ahead of the holiday season.
On Monday, the company reaffirmed plans to hire 250,000 seasonal employees across the U.S. within its fulfillment and transportation networks, a move that briefly lifted the stock.
This is in line with prior years, when Amazon hired a similar number of seasonal workers to meet peak demand.
Still, concerns over reduced customer spending amid the impacts of tariffs continue to challenge online retailers this holiday season.
In September, Amazon also announced its Delivery Service Partner (DSP) program, which is now in its seventh year. It noted an additional $1.9 billion investment, bringing the total to $16.7 billion over the last seven years.
This addition will help increase driver pay to the national average of nearly $23/hr, depending on the DSP’s location.
Analyst optimism vs legal woes
Bank of America analysts indicated a 1-point increase in Amazon’s 3Q year-on-year online spending compared to Q2, remaining bullish over its “eCommerce share gains, expanding retail margins, and potential for AWS acceleration of added capacity.” They reiterated their Buy rating on the shares, citing better-than-expected performance.
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But this optimism is tempered by legal and regulatory headwinds. In late September, Amazon reached a historic $2.5 billion settlement with the Federal Trade Commission (FTC) over allegations of deceptive practices in enrolling and retaining Prime members.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson.
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Of the $2.5 billion settlement amount, Amazon will refund $1.5 billion to its customers who were enrolled or auto-renewed between June 2019 and June 2025 and were harmed by these deceptive practices, while $1 billion will be paid as a civil penalty.
Compounding matters, Amazon faces a Prime Day class-action lawsuit filed in Washington State. The lawsuit alleges that Amazon inflated list prices and deceptively presented “percent off” discounts that never reflected realistic prior prices.
The lawsuit alleges,
“Every year since 2015, mega-retailer Amazon invites customers to enjoy steep discounts,” during a brief Prime Day window. But, “Prime Day is rife with fake sales and misleading “percent off” claims.”
The lawsuit even alleges that the increase in online spending is partly due to Prime Day, exposing Amazon to huge profits from its “fraudulent advertising of fake Prime Day percentage Discounts.”
As Amazon navigates regulatory battles and reputational challenges, it continues to lean on consumer trust, increased customer spending, and cloud expansion to sustain its growth trajectory.
Related: Bank of America reveals inflation forecast ahead of CPI
