SEATTLE (Legal Newsline) - Amazon.com faces a class action lawsuit from shareholders that alleges it spent too much on infrastructure, leading to a $3.8 billion net quarterly loss announced on April 28.
The plaintiff in the lawsuit filed July 6 in Seattle federal court is the Asbestos Workers Philadelphia Welfare and Pension Fund, which is represented by New York firm Bernstein Litowitz and Seattle firm Byrnes Keller Cromwell.
The proposed class action seeks to represent those who invested in Amazon between July 30, 2021, and April 28, 2022. It claims investors were lied to during that period about the need for Amazon to make massive commitments to keep up with demand caused by the COVID-19 pandemic.
It notes that those measures doubled its warehouse, distribution and data center space to 387.1 million square feet.
"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," the suit says.
Contrary to public statements made during the class period, Amazon had "already implemented cutbacks to Amazon's fulfillment capacity without disclosing that critical information to investors," it adds.
After media reports, the stock price declined 14%.