Amazon.com, Inc. Investors Lawsuit Over-expansion Image
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Amazon.com, Inc. (Over-expansion)

Class Action
  • Active
Investigation
04/28/2022
Initial Lawsuit
07/08/2022
Lawsuit Progression
09/06/2022

Investigation

Did Amazon.com, Inc. (AMZN) mislead investors regarding its growth and expansion strategy? Was the company over-expanding without telling investors?

The company disclosed its overcapacity on April 28, 2022, resulting in $2 billion in additional costs during Q1 2022.

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We will update this post as it unfolds.

  • Investigation Date
    04/28/2022
  • Hypothetical Affected Period
    July 30, 2021 to April 28, 2022
  • Hypothetical Transgression
    Securities Violation
Main Event

First Loss in a While - Over-expansion?

04/28/2022

SEC Filing

Amazon announces its financial results for Q1 2022, with a $3.8 billion net loss and earnings per share of -$7.56. The company also reveals operating cash flow decreased by 41% to $39.3 billion, compared with $67.2 billion for the trailing twelve months ended March 31, 2021. Free cash flow decreased to an outflow of $18.6 billion for the trailing twelve months, compared with an inflow of $26.4 billion for the trailing twelve months ended March 31, 2021.

In a conference call to discuss the results Olsavsky disclosed $6 billion of “incremental costs,” including $4 billion of costs that they “consider to be more within our control and are working to reduce” He added that the “additional costs correspond to the state of the labor force and fulfillment network” because they transitioned from being understaffed to being overstaffed, resulting in “lower productivity” costing “approximately $2 billion in cost compared to last year.“

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close Previous close Price variation Percentage variation
$124.28 $144.6 $-20.31 -14.05%
See more on Factual Timeline

Initial Lawsuit

First Complaint - 07/08/2022

An Amazon.com investor (AMZN) filed a class action lawsuit on behalf of persons and entities that acquired Amazon common stock between July 30, 2021 and April 28, 2022, inclusive.

  • Filing Date
    07/08/2022
  • Class Period
    07/30/2021 to 04/28/2022
  • Transgression
    Securities Violation
  • Filing Firms
    Barrack, Rodos & Bacine
    Tousley Brain Stephens PLLC
  • Case Title
    Detectives Endowment Association Annuity Fund v. Amazon.com, Inc. et al
  • Docket Number
    2:22-cv-00950
  • Court
    Washington Western District Court
  • Free File
    Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

(i) Amazon was engaged in an overly aggressive expansion of its warehouse and fulfillment network;
(ii) its over expansion was not appropriately controlled or planned;
(iii) such over expansion was not supported by demand;
(iv) the over-expansion had created an economic burden on the company that exposed Amazon to billions in unnecessary “incremental costs” and;
(v) would force the company to engage in large scale “cost efficiency” procedures and steps to unburden itself from the weight of its self-inflicted economic yoke.

Defendants

  • Company
    Amazon.com, Inc.
  • Chief Executive Officer
    Andrew R. Jassy
  • Chief Financial Officer
    Brian T. Olsavsky
  • Other
    David Fildes

Lawsuit progression

  • Docket Number
    2:22-cv-00950
  • Court
    Washington Western District Court

The lead plaintiff deadline has passed, we will update this page as the lawsuit progresses.
Last event retrieved on 09/27/2022.

Factual Timeline

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