Jeff Bezos Loses $2.8 Billion In A Day

Apr 25 2014, 5:36pm CDT | by

Amazon.com was chipper late Thursday about its first-quarter earnings report.

On Friday, Wall Street offered its view about the results and the outlook. It wasn’t pretty. Especially for founder and CEO Jeff Bezos.

The shares fell 9.9% to $303.83, their lowest close since Oct. 9, when they finished at $298.23. The percentage loss was its largest since Jan. 31, when the shares fell 11% after revenue and profits missed forecasts.

The plunge cut the value of Bezos’ stake in the company by nearly $2.8 billion in just one day.

Amazon shares are now down 25.5% since hitting $408.06 on an intraday basis on Jan. 22. They’re off 25.4% since its closing high of $407.05 on Jan. 21.

So, what was the problem? Guidance. Amazon said it could post an operating loss of $455 million in the second quarter — or a profit of $55 million. That more than offset its expectation that revenue could grow 15% to 26% from last year’s second quarter, to $18.1 billion to $$19.8 billion.

The guidance undid the fact that revenue of $19.74 billion in the quarter were up 23% from a year earlier and beat estimates. Earnings of 23 cents were up from 18 cents a year ago and were in line with estimates.

And there was no indication from anyone that the company was becoming more focused on delivering positive earnings. The company expects to expand its expansion of its fulfillment centers. It will produce more original video content. It inked a deal with Home Box Office to make videos of older series available on its Amazon Prime Instant Video service next month and will make HBO’s HBO Go service available on its new Fire TV set-top box by year-end.

Maybe they didn’t like Amazon’s disclosure that it was cutting prices for its Amazon Web Services, its cloud-computing operation.

And maybe investors were unnerved by a Wall Street Journal photo of Amazon gearing up trucks in the San Francisco area to deliver packages itself. Good for ensuring packages arrive on time. Not so good because Amazon could assume more costs of fulfilling customer orders.

Friday’s plunge means the market capitalization of Amazon has fallen from nearly $194 billion to $144.6 billion, based on 476 million outstanding shares. Bezos, who said the year had gotten off to a “kinetic start,” has seen the value of his stake in Amazon fall from $34.1 billion to $25.4 billion. Bezos owns nearly 84 million Amazon.com shares, 18% of the shares outstanding.

Amazon was the worst performer among stocks in the Standard & Poor’s 500 Index and the Nasdaq-100 Index. Stocks had a rotten day overall, in part because of worries about Russia and Ukraine tensions.

It may be unfair to concentrate on Amazon because of a number of momentum stocks have battered since peaking earlier this year. Tesla Motors shares are down 23% from their March 4 peal. So, CEO Elon Musk’s 35 million shares have fallen about $1.9 billion. Google’s class A shares are down 14.3% since Feb. 25. So, theoretically co-founder Larry Page’s net worth has been trimmed from $28.6 billion in February to only $24.6 billion.

 
 

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