Amazon.com, Inc. AMZN shares rallied on Friday after an effort to unionize one of its warehouses in Bessemer, Alabama, was voted down. On Monday, Bank of America analyst Justin Post said Amazon workers will likely continue to push to unionize, but last week’s vote may eliminate a certain degree of regulatory overhang for Amazon for now.
What Happened? Last week’s Bessemer unionization vote had only 52% turnout among eligible voters. The non-union side received 59% of the votes cast.
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The Retail, Wholesale and Department Store Union (RWDSU) now has five days to contest the election results and has said it intends to file objections. President Joe Biden and Sen. Bernie Sanders had both publicly supported the unionization effort.
Why It’s Important: Post said the Bessemer vote was the second time an Amazon unionization vote has reached the final stage in the process, and Amazon has now won both votes.
Post said he expects the push to unionize will continue among Amazon workers, and efforts may be more successful outside of the South. Post pointed out that Amazon’s $15 minimum wage is already more than double Alabama’s $7.25 state minimum wage.
Amazon has been pushing to expand its fulfillment center presence in rural communities to better compete with Walmart Inc WMT. Post said a unionization in Bessemer may have altered that strategy, but the victory for Amazon will likely keep its rural expansion on track for now.
Post compared Amazon’s victory to a similar election victory secured by Uber Technologies Inc UBER in California last year.
“Similar to the Prop 22 win for Uber, Amazon’s victory could help alleviate some of the regulatory overhang on the stock (AMZN stock only up 7% since July 31, 2020, vs. Nasdaq up 29%), though Amazon’s scale continues to invite other scrutiny including further unionization efforts, and US/EU antitrust issues persist,” Post said.
Bank of America has a Buy rating and $4,150 price target for AMZN stock.
Benzinga’s Take: U.S. tech megacap stocks like Amazon continue to put up impressive growth numbers year after year, and Amazon reported another 37.6% revenue growth and 84% net income growth in 2020.
For now, it seems the only thing that can keep these tech stocks down are concerns about antitrust action, unionization, data collection and usage regulations or other potential legal or regulatory headwinds.
(Photo: Christian Wiediger via Unsplash)
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