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Why JB Hi-Fi Limited shareholders shouldn’t bet against Amazon.com

Credit: Peter Heath

The JB Hi-Fi Limited (ASX: JBH) share price has fallen 1.9% today compared to a 0.3% fall for the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) index. Here are a couple of reasons why the shares could be falling today:

  1. JB Hi-Fi’s shares were among the market’s top performers on Tuesday, soaring 6.8%. That rally was likely driven, at least in part, by the ‘underwhelming’ debut of Amazon.com (NASDAQ:AMZN) in which many consumers expressed their disappointment with the range of products available on the global ecommerce behemoth’s site, as well as the prices. Today’s decline could simply be something of a reversal after yesterday’s strong gains.
  2. The fall in JB Hi-Fi’s share price today could also be due to an announcement from Amazon today. Amazon said its launch in Australia was its biggest opening day in the company’s history; this may have reminded investors about the long-term threat that Amazon no doubt poses for the retail space. The Harvey Norman Holdings Limited (ASX: HVN) share price is trading lower today, as well.

Indeed, I wouldn’t be game to bet against Amazon. While I don’t think the retail space is entirely off limits due to Amazon’s arrival, I would certainly exercise caution.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ryan Newman owns shares of Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Amazon. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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