Amazon: Teamsters Strike Unlikely to Have Meaningful Impact

We do not expect a material impact on Amazon’s e-commerce operations after thousands of workers went on strike on Dec. 19. The shares are up modestly intraday, reinforcing the notion that this is not likely to have a negative impact. Amazon continues to drive efficiencies throughout its network, which helps lower costs and improve delivery speeds and ultimately drives increased purchases by Prime members. Our fair value estimate remains at $200, leaving the shares overvalued, in our view. Shares of nearly all companies in our narrow software coverage have been extremely strong since September on expectations for interest-rate cuts by the Federal Reserve. Fundamentals have not changed. While we have not changed our discount rate, a 100-basis-point reduction would result in a fair value estimate increase of at least 20%.