There are a lot of things that can cause a particular stock or even a group of stocks to fall. One of the things that is included in this are rumors of another company getting into their business. Lately, that company has been Amazon. Whenever the news of Amazon potentially entering a market hits the airwaves, companies in that market often see declines in their stock prices.
Today, the two stocks that fell hard on rumors were CVS and Walgreens. These two major prescription drug stores are household names for most Americans. Still, that does not stop the fear of Amazon entering a market from putting a chill down the spine of just about any company.
Apparently, Amazon is in the final stages of what could be a historic decision to either get into the prescription drug market or not. They have all operations ready to go, the question is if they will actually move forward with this plan. It is rumored that a decision one way or the other will be made by Thanksgiving. That is critical for the likes of Walgreens and CVS.
At the same time, there is a possibility that Amazon will decide to forego this whole plan. People often do not stop to think about the overall cost to a business getting into a new market. There is a lot of overhead that can come with starting something new. If Amazon feels that the competition will be too stiff in any particular segment of the market, then they are very likely to just drop that idea. At the moment, the prescription drug market is what is rumored to be on their mind. Tomorrow it could be something completely different.
One interesting sign in this whole situation is how little Amazon’s stock moved on the rumors. It is up roughly thirty percent on the year, but it did not provide much of a wiggle for investors on this day. Perhaps those who put their money into the company’s stock either already have this move into prescription drugs factored in, or they just don’t think it will serve as much of a growth catalyst for the future.
When Amazon moves into another business or is even rumored to be considering doing so, it is big news for other players in that industry. However, those same rumors may not play much of a role at all for Amazon as a company itself.