Amazon.com Inc. AMZN founder, chairman, chief executive and president, Jeff Bezos, is now on the list of the world’s top 10 richest people per Bloomberg reports. He is now worth $40 billion, which makes him the 10th richest person in the world.
Bezos is also the largest shareholder of the company holding 83.9 million of Amazon shares, according to the latest regulatory filing.
What Drove His Fortune?
Amazon announced its first quarter 2015 earnings on Apr 23. Amazon shares zoomed $55.11 or 14% from $389.99 (closing price on Apr 23) to $445.10 (closing price on Apr 24) following its first quarter 2015 earnings release.
The price increase was a record high — the highest one-day dollar gain in its history, as well as the highest increase in percentage since Apr 27, 2012 (when it closed at $226.85). Also the e-commerce giant generated a 52-week return of around 32.0% as on Apr 24.
The epic rise in share price made Bezos the biggest beneficiary and his fortune jumped nearly $5 billion to $40 billion, thereby placing him on the esteemed list.
Amazon’s First Quarter Performance
Amazon reported a 12 cent loss for the first quarter, better than the Zacks Consensus Estimate of a loss of 13 cents. Also, it reported revenues of $22.72 billion, which were ahead of the Zacks Consensus Estimate of $22.54 billion.
Amazon for the first time reported its Amazon Web Services (AWS) result in a newly formed segment. The results of the quarter were primarily driven by AWS, which generated 7% of revenues, growing 10.3% sequentially and 49.1% year over year. Also its North America segment accounted for around 59% of sales, representing sequential and year-over-year growth of -22.7% and 24%, respectively.
Conclusion
Exactly five months ago, Bezos watched his Amazon holdings lose about $7.4 billion in value over the course of one year, making it the worst on the market since 2008.
Amazon was criticized for its huge investments that continued to yield low returns and took a toll on the company’s bottom line. Investors were concerned about Bezos' system of big top-line growth at the expense of earnings. This made investors wait for the big day when its “opportunistic” buying would generate profits.
But Amazon slowly started getting back on track with its fourth quarter 2014 performance and in the recent quarter showed that it is performing true to form. This has restored investors’ faith in the company.
It continues to grow revenues and generate very strong cash flow quarter upon quarter (discounting seasonal variations). Investors continue to believe in Amazon’s prospects, especially its cloud computing business, Amazon Web Services and Amazon Prime, which have been increasingly adding subscribers.
But uncertainty regarding its investment plans and the probability of continuing losses still prevail.
Amazon currently holds a Zacks Rank #3 (Hold).
Better-ranked stocks in this industry include Groupon, Inc. GRPN, PetMed Express, Inc. PETS, and Autohome Inc. ATHM. All these stocks sport a Zacks Rank #1 (Strong Buy).
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