If it is a wealth race, it is safe to say that former Amazon.com Chief Executive Officer (CEO) Jeff Bezos is racing with a Mercedes custom-made formula one car and others are pushing the pedals of mountain bikes. They are all in a race, but Bezos is a couple of billions ahead of them, and the gap keeps on increasing.
According to Bloom Billionaires Index, Jeff Bezos’ wealth hit a record $211 billion net worth on Tuesday, July 6, 2021, and this is attributed to a 4.7% surge in Amazon’s shares. Bloomberg reports that after the United States Department of Defense at the Pentagon announced it was cancelling a cloud-computing contract with Microsoft Corporation. Through the Amazon Web Services (AWS) and Microsoft through its Microsoft Azure, Amazon is currently involved in a turf war over who should rule the Cloud. Hence, any development that negatively affects one company works for the benefit of the other.
The decision for The Pentagon to cancel its contract with Microsoft led to a rally in Amazon’s stock, which translated into Bezos becoming $8.4 billion richer. Bezos, who stepped down as Amazon’s CEO last week after 27 years in the position, still owns 11.3% of Amazon shares. It is also worth noting that Bezos did not leave Amazon altogether. He instead took over the role of the company’s Executive Chairman.
Early this year, Bezos was trading places for the wealthiest person in the world with Tesla Inc. CEO Elon Musk. Elon’s wealth significantly rose when Tesla (ticker: TSLA) was included on the S&P 500 in December last year, peaking at $210 billion in January before slumping down (as did Tesla stock) to his current net worth of $180.8 billion. Bernard Arnault, CEO of LVMH Moët Hennessy, the world’s largest luxury goods company, is third at $168.5 billion.
Bezos’ net worth rise has been greatly attributed to the excellent performance of Amazon on the stock market, with the company’s stock gaining over 20% since March 2021. Amazon is one of the exceptional companies that were not affected by the COVID-19 pandemic.
The rise in the value of Amazon stock did not only benefit Bezos but his ex-wife Scott MacKenzie as well. Her 4% stake in the company meant that she added $2.9 billion to the net worth, which she is currently trying hard to give away through philanthropy.
Why Amazon stock is surging
As noted earlier, last week, the Pentagon announced that it was cancelling a cloud-computing contract it had awarded to tech giant Microsoft (ticker: MSFT) following several years of a dispute between the US government and some tech giants over the deal. The deal worth $10 billion was awarded to Microsoft in 2019, but the work was to be split between Microsoft and its rival, Amazon. Now that the deal is off the table, investors seem to have more confidence in Amazon and have bought its stock in high volumes, hence the surge in its share price.
According to data provided by Dow Jones Market Data, Amazon outperformed all other companies on the benchmark S&P 500 and the tech-heavy Nasdaq 100 on the morning of Tuesday, July 6, 2021. Amazon’s 4.2% rally on that day added $65 billion to the company’s valuation, taking its market capitalisation to $1.8 trillion. This means Amazon is the third-largest company globally in market capitalisation, only behind Apple (ticker: AAPL) and cloud-computing rival Microsoft.
Amazon’s new CEO
On Monday, July 5, 2021, Jeff Bezos’ successor, Andrew “Andy” R. Jassy, started work as Amazon CEO. Although he has big shoes to fill, Andy is not new to Amazon and its business model. The 53-year-old businessman has been at Amazon for more than two decades (24 years, to be exact). He has been president of the company’s cloud-computing business, the Amazon Web Services (AWS), since its inception in 2003.
Jassy rises on to the helm of Amazon at a time when the company is posting glittering earnings reports and sparkling financial performance. The company is moving through the COVID-19 pandemic unscathed, unlike in the case of other companies, and its Q1 FY2021 results attest to that. Its sales saw a 44% year-on-year growth, marking the fastest quarterly growth in over a decade.
As other companies were retrenching, cutting salaries and laying off workers during the height of the pandemic last year, Amazon was hiring. The increased online shopping brought about by the lockdown and stay-at-home directives around the globe forced Amazon to hire more than 500,000 employees in 2020 to match the demand of its services. This brought the company’s total staff to more than 1.3 million.
The task ahead
In his letter to Amazon employees, former CEO Jeff Bezos pointed out how the company needs to do more and better for its employees. In the recent past, there have been multitudes of complaints on social media from Amazon employees about low pay, stressful working environment, and other unreasonable demands that had warehouse workers avoiding the bathroom for fear of being punished.
Bezos wants this to change and make Amazon the best employer globally by doing more to improve the way it looks after its people.
“If we want to be Earth’s Best Employer, we shouldn’t settle for 94% of the employees saying they would recommend Amazon to a friend as a place to work. We have to aim for 100%,” Bezos said.
He added that despite what Amazon has accomplished over the years, the company needs to adopt a better vision for its employees’ success moving forward.
“We have always wanted to be Earth’s Most Customer-Centric Company. We won’t change that. It’s what got us here. But I am committing us to an addition. We are going to be Earth’s Best Employer and Earth’s Safest Place to Work,” Bezos wrote in the letter.
It should be remembered that Amazon already raised the minimum wage for its employees to $15 per hour and invested more than $300 million in employee safety projects in 2021.
Jassy’s job is to make sure the company, whose stock is currently trading at $3,662.62 a share, with a market capitalisation of $1.84 trillion and solid financials, keeps performing well for the shareholders and takes an increased interest in the well-being of its employees.