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Amazon.com, Inc.

Case Details

Class Period: July 30, 2021 - April 28, 2022
Date Filed: July 06, 2022
Case Number: 2:22cv00934
Jurisdiction: Washington Western District Court
icon-casetype Case Type: Securities Case
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Case Summary

Amazon is a global technology company with multiple business lines including, among others, e-commerce services and distribution, website development and hosting, inventory and supply chain management, and fulfillment and logistics. Prior to the onset of the COVID pandemic in early 2020, a key priority for Amazon was increasing its ability to provide its e-commerce customers with shortened delivery times, including same-day delivery. To meet that goal, Amazon invested significant capital to aggressively expand its infrastructure and fulfillment networks. When the COVID pandemic (and related lockdowns and other restrictions) hit in early 2020, consumer demand for goods purchased through Amazon’s e-commerce business skyrocketed. To meet that increased demand, Amazon continued expanding its infrastructure and fulfillment network capacity. Indeed, between the end of 2019 and the end of 2021, Amazon more than doubled its warehouse, distribution, and data center space, expanding from 192 million square feet to 387.1 million square feet over that time. The complaint alleges that, throughout the Class Period, Defendants made numerous false and misleading statements to investors concerning Amazon’s continued investments in expanding infrastructure and fulfillment network capacity. Specifically, Defendants repeatedly assured investors that the Company’s infrastructure and fulfillment investments were driven not just by recent increased demand related to the pandemic, but also long-term trends and strong multiyear demand. In reality, the Defendants knew or recklessly disregarded that the Company’s infrastructure and fulfillment network investments substantially outpaced demand and that those investments were a massive, self-imposed, undue drain on Amazon’s financial condition. Indeed, contrary to Defendants’ public statements during the Class Period, by July 2021, Defendants had already implemented cutbacks to Amazon’s fulfillment capacity without disclosing that critical information to investors. As a result of the Defendants’ misrepresentations and omissions, Amazon’s common stock traded at artificially inflated prices during the Class Period. The truth emerged on April 28, 2022, when Amazon reported a $3.8 billion net quarterly loss first reported net quarterly loss since 2015. After months of falsely representing that Amazon’s expansion of its e-commerce fulfillment network and infrastructure was necessary and appropriate to meet both short-term and long-term customer demand, Defendants disclosed that day that Amazon was no longer chasing physical or staffing capacity. Defendants disclosed $6 billion of incremental costs, including $2 billion due to overcapacity in Amazon’s fulfillment and transportation network. Defendants further disclosed that they expect[ed] the impacts of this to persist for the next several quarters as we grow into this capacity. As a result of these disclosures, Amazon’s share price declined precipitously.

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Complaint