What Jeff Bezos Stepping Down Means for Amazon Stock
Talk about paradigm shifts, but Amazon.com Inc. (NasdaqGS:AMZN) singlehandedly changed the way we shop, forever.
Now that Amazon’s founder, Jeff Bezos, is stepping down as CEO, investors want to know if Amazon’s stock, which seems like it’s been going up forever, can keep going. There are rumors that Bezos stepping down could signal the end of the stock’s run.
There are a few reasons why Bezos is giving up his crown, but it all boils down to one question: What does this transition mean for your money, whether you’ve owned Amazon for years, just picked up a share or two, or you don’t own it yet?
Amazon’s Chief Financial Officer and Senior Vice President, Brain T. Olsavsky, officially announced on Tuesday, February 2, 2021, in the company’s Q4 2020 earnings call that founder Jeff Bezos would be transitioning from CEO of the company to Executive Chairman in the third quarter of 2021. Bezos himself disclosed the move in an internal memo to “Amazonians” the same day.
It’s an opportune time for Amazon’s founder, Chairman of the Board, President, and Chief Executive Officer, to announce his “transition” to Executive Chairman just as the company reported record revenue of over $100 billion for Q4 2020 and Amazon’s stock’s up 62% in the pandemic year.
Insiders say Bezos’s transition is more of a title change than a power transfer and as executive chairman Bezos will still focus on “early initiatives” and new products.
However, what’s not being talked up is how the transition removes Bezos from the front lines dealing with the company’s 1.3 million workers, many of whom who are attempting to unionize, starting with the company’s Alabama workers.
Here’s why that matters to the fate of Amazon – and your money, whether you’re a current or a prospective investor.
This is THE Forever Stock
The timing’s right for Bezos to pass the CEO baton, especially since it’s going to longtime collaborator and architect and CEO of Amazon’s spectacularly successful cloud business, Amazon Web Services (AWS), Andrew R. Jassy.
After graduating Harvard Business School in 1997, Jassy’s first role at Amazon was as Bezos’s “shadow” for two years. Fast-forward a few decades and some change, and Jassy’s responsible for the mega-success of AWS, which accounted for 28% of the whole company’s revenue growth in Q4 2020 and 52% of its operating income.
Over the past year, AWS posted $50 billion in sales, accounted for about 12% of Amazon’s revenues, and most importantly contributed a whopping 60% of Amazon’s profits, thanks to the cloud’s huge margins.
It’s easy to see why Jassy’s been chosen to take Bezos’s place. And while the market reaction to Jassy’s ascent was positive, it wasn’t without some consternation.
Analysts and longtime Amazon watchers weren’t sure that putting the company’s cloud business above its “Worldwide Consumer Business,” which is what CEO of that division Jeff Wilke managed, before he announced in August last year he would be “retiring” in 2021, was the best idea.
But the market and the stock’s reaction to Jassy’s appointment has, so far, calmed some nervousness.
Investors are still nervous about Amazon’s future under Jassy, as he will have to navigate a European Union investigation of Amazon, privacy issues, liability issues, market dominance, as in monopolistic tendencies if not realities, and political winds that could blow up in the soon to be CEO’s face.
Still, Bezos couldn’t have picked a better man for the job – in my opinion, based on everything I’ve read and heard about Andy Jassy, he’s most likely to succeed in the same way Satya Nadella succeeded spectacularly when he took over as CEO of Microsoft.
Amazon is worth every penny of its stock price, and then some. With Bezos still in the big picture and Andy Jassy with his hands on the company’s rudder, I would never sell Amazon.
The only threat some investors fear is an antitrust onslaught led by Kamala Harris, and the company being broken up.
In the case of Standard Oil and AT&T, the sum of their parts ended up being worth a lot more than the monoliths that were broken up. And in Microsoft’s case, while the breakup was defeated on appeal, the company grew exponentially in subsequent years.
So, if the company is ever broken up… I say bring it on.
Bottom line, Amazon is a forever stock – but it’s not the only one to make my list.
I have a list of over 50 stocks that are clear, blaring buys – and, as a bonus, some that are complete and total portfolio leeches. You might be shocked at some of the ones I’ve chosen, but trust me when I say that I recommend buying the good ones right now – like, yesterday.
Sure, not all of them are as big as Amazon, but I believe they’re on their way to generating huge gains this year. In a video presentation, I go through each and every one of the stocks on my list – tickers, stock prices, everything.
P.S. I made you an easy downloadable worksheet to print off and take notes as you watch. You can click here to download it.