Amazon’s CEO Jeff Bezos was on the cusp of an “I told you so” moment when Amazon stocks plummeted this week, which caused Bezos to lose nearly $6 billion in a 24-hour period. This happened despite Amazon announcing quarterly profits of $482 million, which is more profit than the previous 17 quarters combined, so what happened?
Bezos has been in the spotlight of the financial world with his “thrifty boot-strapping strategy” for Amazon, which paid off with this quarter’s profit offering up the evidence of his tactics working, reports Venture Beat on January 29. Bezos’ strategy was doubted by some of those in the financial know and this quarter’s earnings was looking like he would get his “I told you so” moment.”
Then it happened, panicky stock holders set the ball in motion and the stock tanked when Amazon profits fell short of the analyst’s projections. Despite a banner quarterly profit, Amazon stocks fell 13 percent. This is when Bezos made global headlines because his personal worth saw $6 billion disappear into thin air once the news broke that Amazon fell short of its projected profits.
As E Canada points out today, this $6 billion loss happened over the course of a single day for Bezos. They also point out that “Bezos’ drop in personal finances meant he had been relegated from the fourth to the fifth richest person in the world by Wednesday evening.”
Even with Amazon stock taking a nose dive, “the stock was still up an astounding 38,000 percent from the days of the dot-com bust,” reminds Venture Beat. The profit fell short of its projected analysis because the cost of delivering goods, which is critical for Amazon when generating profits. The shipping costs was more than expected, throwing off the projected earnings.
When the shipping costs took more of a sizable chunk than projected and investors saw the profits come in under the analyst projections, investors panicked and the stocks tumbled. What disappeared overnight could feasibly come back the same way. Now that the dust has settled. While Bezos lost $6 billion, being the 5th richest person in the world is not a bad consolation prize!