Kerry Rice, Needham & Co Internet Analyst, just stated on business news that the impact of having to collect and pay sales tax on internet sales would impact Amazon’s bottom line. Amazon just fell by $40/share after market closing today. Assuming a 5% reduction in revenue would result in a 19% reduction in EPS (earnings per share).
That brought a question to my mind. Most retail business in America is subjected to the requirement of collecting and remitting a sales tax to the states in which they do business. Business must bear the cost/expense to perform this collection for the state but is not reimbursed or compensated in any way. If they are one day late in filing their remittances, they are also subject to hefty fines.
In light of that business cost, evidently non-collecting internet businesses are garnering a higher profit per share. This is an example of the bizarre movement of market stock prices. What is really going on? Who benefits in this scenario?