Amazon (AMZN) is back under regulatory watch after the Federal Aviation Administration (FAA) confirmed that it has opened an investigation into a drone delivery mishap in Texas. The probe comes as Amazon tries to expand its Prime Air program and bring drone deliveries to more U.S. locations. It also arrives at a time when competition is heating up, with Walmart (WMT) now rolling out its own drone delivery service in several markets.
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Regulators Step In
The FAA said an Amazon MK30 drone struck an overhead wire line in Waco, Texas, on November 18 during a delivery flight. According to the agency, the drone hit a thin internet cable and carried out what the company calls a “safe controlled landing.” However, no injuries or widespread service outages were reported.
The National Transportation Safety Board (NTSB) said it is aware of the incident but has not opened an investigation yet. Still, this marks the second reported issue in recent weeks, after two Amazon drones hit a crane in Arizona in October.
Amazon Defends Safety Record
A video reviewed by CNBC showed the drone rising from a customer’s yard before one of its propellers caught the cable, forcing the aircraft to shut down and descend.
In its response, Amazon said the landing system worked as planned and repeated that safety is its top focus.
Even with the setbacks, Amazon doesn’t seem to slow down its efforts in this space. The company began drone delivery for prescription drugs in College Station, Texas, last year. Amazon still plans to scale the service, with a goal of 500 million drone-delivered packages a year by 2030.
Is Amazon Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 41 Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After an 11% rally in its share price over the past year, the average AMZN price target of $294.97 per share implies 28.4% upside potential.
