FDI e-commerce rules: $50 billion wiped off from market cap of Amazon and Walmart

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Published: February 4, 2019 7:01:39 PM

Amazon shares tumbled on the Nasdaq by 5.38% to $1,626.23 per piece on Friday while NYSE-listed Walmart's stock price ended 2.06 % lower at $93.86.

The reported market cap loss for Amazon is more than billion while for Walmart it is more than billion.

As the revised FDI rules for e-commerce came into effect last Friday, India’s leading online retail marketplaces – Amazon and Flipkart’s parent Walmart together saw $50 billion getting wiped off from their market capitalisation, IANS reported.

The government move to tighten the noose around e-commerce marketplaces funded by foreign capital to curb deep discounting and favoritism to select sellers has allegedly jeopardizing ambitious growth plans of large e-tailers like Amazon and Flipkart.

Consequently, Amazon shares tumbled on the Nasdaq by 5.38% to $1,626.23 per piece on Friday while NYSE-listed Walmart’s stock price ended 2.06 % lower at $93.86.

Amazon had committed $5 billion investments in India while Walmart had bet $16 billion in Indian e-commerce market with Flipkart acquisition last year.

The stock price fall can be attributed to disruption caused in their e-commerce operations in India after the new foreign FDI norms for the e-commerce sector came into effect on Friday, IANS quoted analysts as saying.The reported market cap loss for Amazon is more than $45 billion while for Walmart it is more than $5 billion. At the end of Friday trading, Amazon’s market cap stood at $798.81 billion while for Walmart it was $272.69 billion.

 

Since implementation of the rules, the estimated number of products taken off goes up to 4 lakh till 3rd February, as per Hindi newspaper Amar Ujala.

Amazon-backed vendors such as Cloudtail and Appario, as a result, are no longer selling on the platform.

The rules have forced the company to take-down its key grocery service Amazon Pantry and also withdraw different products such as sunglasses and floor cleaners from its India website.

The products started to disappear from Amazon India website late on Thursday in accordance with the midnight deadline to comply with the revised rules, Reuters quoted two sources as saying.

Amazon said that its Pantry products are currently not available in India, in response to customers’ tweets who weren’t able to buy products from it.

In a recent investor call, Amazon’s CFO Brian Olsavsky said, “…there is much uncertainty as to what the impact of the government rule change is going to have on the e-commerce sector there,” PTI reported as saying.

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