Key takeaways
- Nearly 2,000 Amazon corporate employees took part in a staged walkout yesterday, with 900 protesting at the company’s headquarters
- Corporate workers are unhappy with senior management decisions on climate change, back-to-work mandates and mass layoffs
- Amazon’s share price was down 0.89% yesterday but still has long-term growth potential thanks to its AI and AWS business strands
Amazon can’t seem to catch a break lately. On top of flagging retail sales and a tricky economic environment to contend with, it now has unhappy corporate workers to add to its list of woes. Nearly 2,000 employees took part in a planned walkout this week, with climate change and a back-to-work mandate Amazon enforced from the start of May at the top of the agenda.
Amazon’s share price suffered marginally at the walkout, which isn’t the first time the online shopping titan has seen unhappy employees raise their concerns. But analysts still think the share price has long-term growth potential thanks to Amazon’s renewed focus on AI. Let’s get into the details.
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What are Amazon workers striking about?
Just under 2,000 employees went on strike yesterday afternoon, with the walk-out organized by Amazon Employees for Climate Justice and a remote work advocacy group. The protestors want Amazon’s climate impact to be “at the forefront of [Amazon’s] decision-making” and argue the back-to-work mandate doesn’t help to achieve the company’s climate change goals. 900 of the protestors were said to be outside Amazon’s HQ in Seattle.
Back in February, CEO Andy Jassy announced Amazon employees were expected to be in the office three days a week, with the policy taking effect at the start of May. At the time Jassy said the mandate would help with collaboration and be a “boost for the thousands of businesses located around our urban headquarter locations”.
Amazon workers are also protesting the layoffs that have taken place in the last year, with the e-commerce giant slashing 27,000 roles across two separate announcements. It was the largest layoff round Amazon has ever conducted in its 29-year history. In short, there’s a lot for Amazon’s corporate employees not to be very happy about.
In a statement, Amazon said “We respect our employees’ rights to express their opinions”. An Amazon spokesperson, Rob Munoz, said the company has “had a great few weeks with more employees in the office”.
Amazon’s cost-cutting bonanza bites back
Amazon has been undertaking several cost-saving measures in a bid to reel back the heavy spending from the pandemic, when everyone was at home and ordering packages. It resulted not only in the huge layoffs round across the company’s advertising, HR, gaming and AWS divisions among others, but entire programs being shut down including Amazon Smile and Amazon Care. It also scaled back other expansion ambitions, including shuttering new warehouse plans.
It’s an understandable upset after Jassy has repeatedly said in the past that Amazon had no plans of introducing mandated office time. In 2021 he said “there is no one-size-fits all approach for how every team works best” – clearly times have changed.
The betrayal led to a Slack channel being started advocating for remote work, with allegedly 33,000 Amazon employees joining in. Over 20,000 workers are said to have signed a petition asking for line managers to be back in charge of whether their direct reports need to go into the office or not.
As for the climate change issue, there’s no denying the company that ships out packages all over the world has a huge carbon footprint. Amazon said on its shareholders call last week that it will introduce 100,000 electric vehicles into its delivery fleet by 2030 and reach net-zero carbon by 2040. But the protestors say this doesn’t go far enough and Amazon should be amazing to be net-zero by 2030 instead.
The protestors also argue Amazon has originally strayed from its climate pledge, which again was prompted by industrial action after Amazon workers went on strike in 2019. Amazon has quietly done away with its pledge to get carbon emissions from half of its shipments fleet to net zero by 2030, which sparked consternation from employees.
What was the market reaction?
Amazon’s stock price dipped marginally on Wednesday by 0.89% thanks to the walkouts. Given the scale of Amazon’s corporate workforce is roughly 350,000 across the world and only 2,000 took place in the protests, it appears Wall Street wasn’t too phased by the situation.
What investors should be concerned with is whether further walkouts and protests from within could affect Amazon’s bottom line and dampen the stock price. Combined with a sluggish retail environment and a struggling economy, Amazon should be looking to avoid any internal issues bubbling up to the surface.
If Amazon can placate its employees enough and keep the walkout as a one-off, there’s still plenty of potential for investors to catch the upside. With AWS set to become a $100 billion revenue stream for the company and its second phase of AI development, where Jassy confirmed it was developing chips for AI applications, there’s a lot of runway for the stock to grow in value.
The bottom line
Overall, there was a singular theme for the Amazon walkout: a frustration among employees about senior leadership decisions on big decisions. Climate change, back-to-work mandates and layoffs were the key themes of discontent, but Amazon ultimately needs to work on engaging its absolutely massive corporate workforce to avoid further walkouts.
Aside from this, Amazon most likely sees this as a minor blip on the path of its new direction focusing on artificial intelligence and cloud computing. Investors should keep an eye out for any news of further back-to-work conflicts from Amazon and its employees, but the stock is positioned well for growth if Amazon can pull off what it’s saying for developing its AI and AWS capabilities.
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