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Why Stock Just Popped

By Rich Smith - Jan 20, 2021 at 3:52PM

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Amazon proposes a partnership with the U.S. government.

What happened

In a late-breaking development, GeekWire just reported that (AMZN 4.03%) has delivered a letter to new U.S. President Joe Biden offering "to assist you in reaching your goal of vaccinating 100 million Americans in the first 100 days of your administration."  

By 3 p.m. EST, stock had jumped 4.9% in response. worker in a mask carrying a big box

Image source:

So what

In the letter, Amazon Worldwide Consumer CEO Dave Clark reminded the president that is "the nation's second largest employer" with "over 800,000 employees in the United States, most of whom are essential workers."

Clark advised that Amazon has already hired a licensed third-party healthcare provider to administer vaccines on-site at Amazon facilities, and is "prepared to move quickly" to immunize the employees "once vaccines are available." Amazon also says, though, that it is "prepared to leverage our operations, information technology, and communications capabilities and expertise to assist your administration's vaccination efforts."

Now what

Clark did not specifically state in his letter that he wants to use Amazon's facilities, its workforce, or its relationship with the unnamed healthcare provider to administer vaccines to the populace in general, or to help distribute the vaccine to other locales -- although this seems to be implied, and may be something he would offer if the president follows up on his invitation.

At the very least, Amazon seems to be promising to help the new administration get off to a good first start with as many as 800,000 willing vaccine recipients. In so doing, Amazon could lower its own worker safety costs by reducing the incidence of COVID-19 at its stores and warehouses, where more than 19,000 workers have already tested positive over the course of the pandemic.

And if the president takes Amazon up on its implied promise to take an active role in rolling out vaccines across the nation? That could mean contracts and government money for Amazon, which would be an even bigger boon for the stock.

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