Amazon.com, Inc. (AMZN) Turbulence Ahead?

The Marketplace Fairness Act, up for vote in the Senate this month, could change that. If the bill passes both chambers (which is not guaranteed to happen), it will allow states to require retailers to collect sales tax. Amazon prides itself on offering the lowest prices, but in jurisdictions where it does not currently collect sales tax, it has an unfair advantage over brick-and-mortar retailers. The combination of increased sales tax collection and price-matching campaigns by competitors like Best Buy Co., Inc. (NYSE:BBY) could slow Amazon.com, Inc. (NASDAQ:AMZN)’s growth rate going forward, as Amazon would no longer have a price advantage.

Foolish conclusion
Amazon is sure to continue growing revenue for many years to come, and earnings growth is likely to follow. However, up until now investors have overlooked some of the challenges that it will face in maintaining a high growth rate as revenue approaches $100 billion in the next few years. Amazon.com, Inc. (NASDAQ:AMZN) still trades for more than 70 times analysts’ 2014 earnings estimates, and this valuation only makes sense if it can maintain the current revenue growth rate almost indefinitely. It faces enough obstacles today that this rosy scenario does not seem likely.

The article Is Amazon.com Running Into Turbulence? originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg is short shares of Amazon.com. The Motley Fool recommends Amazon.com and Google. The Motley Fool owns shares of Amazon.com, Google, and Microsoft.

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