FTC Sues Amazon Over Alleged Ad Overcharging
Amazon's stock price has taken a hit after the Federal Trade Commission (FTC) filed a lawsuit against the company, alleging that it overcharged advertisers by more than $20 billion since 2019. The suit claims that Amazon's Sponsored Ads auctions were not accurately represented as second-price auctions, but rather behaved like first-price auctions, driving up costs for advertisers.
Despite this setback, analysts remain bullish on Amazon's long-term growth prospects. Bank of America's Justin Post and Rosenblatt Securities have both reiterated their Buy ratings on the stock, with price targets ranging from $334 to $350. Ronald Josey, a highly rated analyst, has also reaffirmed his Buy rating, citing Amazon's strong fundamentals and potential for margin expansion.
Amazon disputes the FTC's allegations, pointing out that its Sponsored Products cost-per-click has remained flat since 2019 while conversion rates have increased by over 24% between 2021 and 2025. The company also claims to have saved advertisers $8 billion through ad-relevancy tools, which have helped boost sales by over 58%.
The FTC's lawsuit has knocked Amazon's stock price down to around $260, but many analysts believe that this presents a buying opportunity for investors. They highlight the company's accelerating AI demand at AWS, retail tailwinds from emerging agentic commerce, and margin expansion as key drivers of future growth.