Jeff Bezos, the billionaire founder and CEO of Amazon, recently saw a tremendous drop in his company’s stock and he also lost his ranking as the fourth richest person in the world, Forbes magazine reported. The e-commerce company published last Thursday its latest quarterly figures, and investors’ reactions on Wall Street were disappointing.
While Amazon reported a quarterly profit of $1 a share, the expected share by analysts was a profit of $1.55. According to a report from Market Watch, shares of Amazon.com Inc. are spiraling toward their worst single-session percentage drop in 18 months after an earnings miss. The stock plunged $48.35, or 7.6 percent, on Friday, the biggest one-day price drop since Amazon went public in May 1997, in the wake of its fourth-quarter results.
After learning of these figures, which prove that analysts’ missed their estimates, it prompted a collapse in the shares of the company at a meeting on Friday and also resulted in a $6 billion lose in the net worth of its CEO, Jeff Bezos. This isn’t Bezos’ only major loss in recent times and he lost $5.95 billion in just five days back in August when Amazon stock closed at $463.37 a share, which was down from $535.19.
Jeff Bezos just lost $6 billion in five days. Other Seattle-area CEOs didn't do so well, either http://t.co/WYuPyocuIB— TechFlash (@TechFlash) August 24, 2015
Shares of the company suffered a fall on Wall Street and it has particularly impacted Bezos, who owns at least 84 million shares of the company, according to Business Insider. However, while Bezos’ saw a $6 billion drop in his net worth in the first hour of after-hours trading, his net worth has still increased dramatically in the past year. Bezos’ net worth is up more than 40 percent since Forbes published its annual Billionaires List in 2015. At that time, he was the 15th richest person in the world with a net worth of $34.8 billion, the report explained.
By the close of the day on Thursday, Bezos’ fortune dropped from his previous 49.8 billion dollar net worth, and he fell from fourth to fifth place of the richest people in the world. The Mexican Carlos Slim, meanwhile, is now fourth on the list, with an estimated net worth of million $49.6 billion.
The reason for the stock plunge is because Amazon posted significantly less profit than expected during the holiday quarter — and expenses, particularly Christmas shipments, exceeded Amazon’s forecasts. However, Amazon’s cloud business, Amazon Web Services has been a great success. After attempts with mobile devices such as Amazon Fire tablet, Amazon has finally found success in the world of hardware with its voice assistant, Echo. And while a majority of the products of the online shop are available elsewhere, products sold exclusively through Amazon are working very well.
While net profit in the fourth quarter more than doubled to a record $482 million, or $1 a share, it was much lower than projected by analysts and Amazon shares plummeted 15 percent when the company announced Thursday its results for the holiday quarter.
“They were well below what people were expecting on earnings because they spent more than what people were expecting,” Kerry Rice, an analyst at Needham & Co, said. “Amazon reached this new level of profitability in 2015 that we hadn’t seen previously. If they don’t keep that trend going in the right direction, the stock goes down.”
“I’ve been following Amazon for a very long time and I’ve seen people doubt this stock before,” said Victor Anthony, an analyst at Axiom Capital Management. “They are investing to get closer to the customer and continue to take meaningful share of retail. Investors who stick with the stock will continue to be rewarded as they have been in the past five years.”
[Image via Chip Somodevilla / Getty Images]