According to a report by The Guardian, the U.K. competition watchdog will investigate e-commerce giant Amazon (AMZN) and Alphabet’s Google (GOOGL) over concerns that the companies have not taken sufficient action to deal with the issue of fake reviews on their websites.
The Competition and Markets Authority (CMA) will decide whether the Silicon Valley companies have violated consumer law by not doing enough to protect their customers. If the investigation finds that the companies have broken consumer law, the CMA could secure formal commitments from them or pursue legal action. (See Alphabet stock chart on TipRanks)
The CMA said sellers use misleading and fake reviews to increase their star ratings. This impacts the prominence of their name and products when consumers search for goods. (See Amazon stock chart on TipRanks)
CEO of the CMA, Andrea Coscelli, said, “Our worry is that millions of online shoppers could be misled by reading fake reviews and then spending their money based on those recommendations. Equally, it’s simply not fair if some businesses can fake five-star reviews to give their products or services the most prominence while law-abiding businesses lose out."
Jefferies analyst Brent Thill recently maintained a Buy rating on Amazon with a price target of $4,200 (23.5% upside potential). The analyst said the company’s aggressive logistics investments would help expand its same-day delivery service.
Overall, Amazon has a Strong Buy consensus rating based on 33 unanimous Buys. The average Amazon analyst price target of $4,281.25 implies 26% upside potential from current levels. The company’s shares have gained 27% over the past year.
According to TipRanks’ Smart Score rating system, Amazon scores a “Perfect 10”. This suggests that the stock is likely to outperform market averages.
Similarly, Stifel Nicolaus analyst Scott Devitt recently reiterated a Buy rating on Alphabet with a price target of $2,700 (10.6% upside potential). The analyst said the company’s plan to begin phasing out third-party cookies from its Chrome browser from mid-2023, as opposed to the earlier plan to commence the phase-out in 2022, will impact the industry much more than Google itself.
Overall, Alphabet has a Strong Buy consensus rating based on 28 Buys and 2 Holds. The average Alphabet analyst price target of $2,785.97 implies 14% upside potential from current levels. The company’s shares have gained 75.4% over the past year.
Related News:
Apple Seeks Five-Year Extension of Irish Data Center Planning Permit – Report
Walker & Dunlop Snaps up TapCap; Street Sees 29% Upside
Tesla Fixes Vehicle Safety Issue in China – Report
U.S. stock futures were flat Monday morning, as caution hit the market amid a spike in coronavirus cases in some of the key markets around the world. A spike in coronavirus in Asia and Australia appears to be fueling some concerns. Those concerns are curtailing any movement to the upside, following last week’s bounce-back.
The Dow Jones Industrial Average futures was down 0.15%, Nasdaq Futures up 0.17% and S&P 500 down 0.03% at the time of writing, pointing to a cautious open later in the day. A cool-down in the bullish momentum comes after the major indices reached record highs last week on weaker-than-expected U.S. inflation data. News of a bipartisan U.S. infrastructure agreement also helped boost risk appetite, sending the major indices higher.
Once the North America session opens, the focus will be on Jefferies Financial Group Inc. (JEF), LiveXLive Media Inc. (LIVX), High Tide Inc. (HITI), WeTrade Group Inc. (WETG), and Key Energy Services Inc. (KEGX). All of those companies are expected to report their quarterly earnings reports.
Virgin Galactic (SPCE) was the most active in pre-market trading. The stock was up by 6.06%, with 922.84K shares exchanging hands at the time of writing. The spike came on the heels of the company's confirmation that it had been granted a license by the Federal Aviation Administration to fly passengers on future spaceflights.
Torchlight Energy (TRCH) was the biggest gainer, with its shares jumping 140.20% on a volume of 48.04K shares at the time of writing. The rally comes on the company's announcement that it has paid a special Series A preferred stock Dividend. The company has also implemented a 1 for 2 reverse stock split of its common stock.
Greenland Technologies (GTEC) was the biggest loser in pre-market activity at the time of writing, dropping by 15.44% on a volume of 14.48k shares. The slide comes just days after the technology developer and manufacturer of industrial electric vehicles confirmed plans to offer ordinary shares for sale in an underwritten public offering. The company intends to use net proceeds from the offering for general corporate and working capital needs.
In M&A news, Amazon (AMZN) cloud unit Amazon Web Services is acquiring Wickr, a company that specializes in developing secure end-to-end encrypted communication technology. The technology should strengthen AWS messaging capabilities, allowing cloud users access to advanced security features not available in traditional messaging services.
“Enterprise customers use Wickr to keep communications between employees and business partners private, while remaining compliant with regulatory requirements,” said AWS in a press release.
Additionally, Rockwell Automation (ROK) has reached an agreement to acquire Plex Systems in a $2.22 billion transaction. The provider of industrial automation and digital transformation intends to finance the all-cash deal through short-term and long-term debt. The deal is expected to close in the fourth quarter.
Blake Moret, the company’s Chairman and CEO, said, “This acquisition will accelerate our strategy to bring the Connected Enterprise to life, driving faster time to value for our customers, as they increasingly adopt cloud solutions to improve resilience, agility, and sustainability in their operations.”
Paychex (PAYX) shares jumped 1.3% after the company reported impressive Q4 financial results for the fiscal quarter ended May 31. Adjusted earnings were up 18% year-over-year to $0.72 a share, as revenue rose 12% year-over-year to $1.03 billion. Earnings beat consensus estimates of $0.67 a share, and revenue topped estimates of $980.48 million.
President and CEO of Paychex Martin Mucci said, “Our fourth quarter results were driven by record client retention levels, record sales results, and stronger checks per client, which were driven by improving macroeconomic conditions and gains in employment.”
Facebook (FB) is planning to make it possible for Instagram users to share and post content using desktop computers. Bloomberg reports that the social networking giant has been testing the desktop posting and sharing feature.
“We know that many people access Instagram from their computer…To improve that experience, we’re now testing the ability to create a Feed post on Instagram with their desktop browser.” said Christine Pai, Facebook spokeswoman.
Apple (AAPL) is seeking a five-year extension on its planning permit for its $1 billion data center in Galway, Western Ireland. According to the Business Post, if successful, the company will have until 2026 to build the data center. As it stands, the company has until September 21 to have the facility up and running.