Bezos Steps Aside

It was the first trading day ever for Amazon.com without Jeff Bezos at the helm. The Amazon founder stepped down from the CEO role yesterday, replaced by long-time Amazon executive Andy Jassy. 

If Amazon investors are worried about losing Bezos, they certainly didn't show it. Amazon shares rose 4.7%, closing the day at an all-time high of $3,676. It's a big move for Amazon stock, which had been stuck in a rut for much of the last year, following its huge rally during the early part of the pandemic. 

Jassy takes over with Amazon at the height of its powers but also in a delicate position, with regulators taking aim at Big Tech companies. My colleague Eric Savitz weighed in on the future of Amazon this past weekend in Barron's Tech Trader column. Here's an excerpt from the column: 

As Wall Street analysts like to say, Jassy faces a “tough compare.” Bezos was always going to be a tough act to follow, and he’s leaving the job on top. (He’ll still be executive chairman and the online retailer’s largest shareholder, assuming all goes well with his trip to space later this month.)

Amazon’s (ticker: AMZN) business sparkled during the pandemic. In the first quarter, sales spiked 44% from a year earlier—the company’s best quarterly growth rate since 2011—and net income was $8.1 billion, its largest quarterly profit ever. With demand surging, Amazon hired more than 500,000 people in 2020, boosting its total staff to more than 1.3 million.

AWS sales grew 32% in the first quarter, to $13.5 billion, an annualized run rate of well over $50 billion. That makes Amazon one of the world’s largest enterprise computing companies—bigger than Oracle (ORCL), SAP (SAP), or Salesforce.com (CRM). Amazon’s online retail business had revenue of $52.9 billion, up 41%. Third-party seller services like fulfillment and delivery were up 60%, to $23.7 billion (roughly the size of FedEx ). Subscription services, mostly Amazon Prime, had revenue of $7.6 billion, up 36%, for a run rate north of $30 billion (slightly bigger than Netflix ). “Other” revenue—mostly advertising—reached $6.9 billion, up 77%.

Amazon’s market value is now $1.7 trillion, which trails just Apple (AAPL) and Microsoft (MSFT) among U.S. listed companies.

Despite the huge numbers, Amazon’s stock has actually looked pedestrian for almost a year now. It’s up just 6% year to date versus 15% for the S&P 500 index. There are several reasons for investor caution, including the CEO turnover. Large tech companies have a mixed record when it comes to replacing founder CEOs.

The success story is Apple CEO Tim Cook, who took over the top job from Steve Jobs in 2011. Apple shares are up 1,000% since he took over.

The cautionary tale is Microsoft, where Steve Ballmer succeeded Bill Gates as CEO in January 2000, and stayed in the role for 14 years. Microsoft’s sales tripled with Ballmer at the helm, but the stock went nowhere.

You can read the rest of Eric's column here, along with his report on other potential good news for Amazon.